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The Reserve Bank of India (RBI) imposed Rs 4 crore and Rs 2 crore fine on Bank of India (BOI) and Punjab National Bank (PNB) respectively in two separate order. This penalty was slapped on the banks after they did not comply with certain directions of the RBI.

In the case of BOI, RBI found that the bank did not comply with certain provisions of directions issued by RBI “contained in the “Master Circular on KYC norms/AML standards/ CFT / Obligation of banks under PMLA, 2002” dated July 1, 2014, circular on “The Depositor Education and Awareness Fund Scheme, 2014 - Section 26A of Banking Regulation Act, 1949 - Operational Guidelines” dated May 27, 2014, “Master Circular on Frauds – Classification and Reporting” dated July 02, 2012 and circular on “Sale of Financial Assets of Doubtful Standard / Fraudulent Origin to Securitization Company (SC) / Reconstruction Company (RC) - Reporting Requirements” dated April 5, 2011.”

On examination of the risk assessment, it was found BOI breached stipulated transaction limits; delayed transfer of unclaimed balances to DEA Fund; delayed reporting a fraud to RBI and sale of a fraudulent asset.

The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 51 (1) of the Banking Regulation Act, 1949.

Commenting on PNB, RBI stated, “The Reserve Bank of India (RBI) has imposed, by an order dated June 07, 2021, a monetary penalty of Rs 2 crore on Punjab National Bank (the bank) for non-compliance of certain provisions of directions issued by RBI contained in the Master Directions on “Frauds – Classification and Reporting by commercial banks and select FIs” dated July 01, 2016 and, the circular on "Creation of a Central Repository of Large Common Exposures - Across Banks” dated September 11, 2013.”

The statutory Inspection for Supervisory Evaluation (ISE) of PNB was conducted by RBI with reference to its financial position as on March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019). The examination of the risk assessment reports revealed non-compliance with RBI directions that is delay in reporting of frauds and not ensuring data accuracy and integrity while submitting data on CRILC platform to RBI.

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