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The Reserve Bank of India has imposed a penalty of ₹1 crore on Punjab and Sind Bank and ₹1.2 crore on Dhanlaxmi Bank for non-compliance with certain directions on lending activities, KYC and deposit rates.
The central bank said that its inspection of Punjab and Sind Bank for FY22 revealed that the public sector lender violated norms on ‘Loans and Advances – Statutory and Other Restrictions’. The bank sanctioned a term loan to a corporation in lieu of, or to substitute, budgetary resources envisaged for certain projects, without undertaking due diligence on the viability and bankability of the projects to ensure serviceability of debt obligations. It also repaid or serviced these loans out of budgetary resources, warranting the charge of ₹1 crore.
Norms violation
Dhanlaxmi Bank, which has incurred a penalty of ₹1.20 crore, violated regulatory norms on ‘Loans and Advances – Statutory and Other Restrictions’, ‘Reserve Bank of lndia (Know Your Customer (KYC)) Directions, 2016’ and ‘Reserve Bank of lndia (Interest Rate on Deposits) Directions, 2016’.
In FY22, the private sector lender sanctioned loans to certain borrowers against pledge of gold ornaments and jewellery for non-agricultural purposes exceeding 75 per cent of the value of gold, and offered normal term deposit rates on certain senior citizen term deposits instead of the higher rate applicable. It also did not obtain PAN or Form 60 for certain term deposit accounts, and allotted multiple Customer Identification Code to certain individual customers instead of a Unique Customer Identification Code (UCIC) to each customer, the central bank said.
In addition, the RBI also imposed a penalty of ₹29.5 lakh on ESAF Small Finance Bank for breach of guidelines on ‘Customer Service in Banks’. During FY22, the bank allowed certain Basic Savings Bank Deposit (BSBD) account holders to open savings bank deposit account, and failed to close certain savings bank deposit accounts within thirty days from the date of opening of BSBD accounts for such customers.
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