The Reserve Bank of India imposed a monetary penalty of ₹1,31,80,000 — approximately ₹1.32 crore — on Punjab National Bank by an order dated 3 July 2024, announced on 5 July 2024, following the identification of two separate regulatory violations during the central bank's Statutory Inspection for Supervisory Evaluation conducted in respect of the bank's financial position as on 31 March 2022. The RBI confirmed the enforcement action in a statement, noting that the penalty is directed at regulatory non-compliance and is not intended to pronounce upon the validity of any transactions or agreements entered into by the bank with its customers.
The RBI said it issued a show-cause notice and considered the bank's reply and oral submissions made at a personal hearing before concluding that the charges were sustained.
TWO DISTINCT COMPLIANCE FAILURES IDENTIFIED
The first violation found during the inspection concerned PNB's sanctioning of working capital demand loans to two State Government-owned corporations. These loans were extended against amounts receivable from the Government in the form of subsidies, refunds, and reimbursements. The RBI determined that this practice contravened its Loans and Advances: Statutory and Other Restrictions directions, which prohibit banks from structuring credit facilities against such government receivables.
The second violation related to the bank's failure to maintain adequate records of customer identification obtained during the course of its business relationships. In certain accounts, PNB did not preserve the required documentation to the standard mandated by the RBI's Know Your Customer Directions 2016.