The Reserve Bank of India (RBI) on December 15 imposed a monetary penalty on ICICI Bank and Punjab National Bank (PNB) for ‘deficiencies in regulatory compliance’.
The RBI imposed a penalty of Rs 30 lakh on ICICI Bank and Rs 1.8 crore on PNB, the RBI said in a press release.
In both cases, penalties were based on deficiencies in regulatory compliance and were not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their respective customers.
Reason for ICICI Bank
The RBI imposed the penalty on ICICI Bank for violation of rules related to ‘levy of penal charges on non-maintenance of minimum balances in savings bank accounts’.
The RBI inspections revealed non-compliance with the directions to the extent the bank levied charges for non-maintenance of minimum balance in saving accounts, which were not directly proportionate to the extent of the shortfall observed, the RBI said.
Later, the RBI came to the conclusion that the non-compliance with RBI directions warranted imposition of monetary penalty.
Reason for PNB Bank
In the case of PNB, the regulatory action is related to the bank’s shareholding in borrower companies, as pledgee, of an amount exceeding 30 percent of paid-up share capital of those companies, the RBI said.
Statutory Inspection
The Statutory Inspection for Supervisory Evaluation (ISE) of Punjab National Bank was conducted by RBI with reference to its financial position as on March 31, 2019 and the examination of the Risk Assessment Report.
The Annual Review of implementation of Exposure Management Measures for Financial Year 2019-20 carried out by RBI during July 2020 and all related correspondence pertaining to the same, revealed, inter-alia, contravention of sub-section (2) of section 19 of the Act to the extent the bank held shares in borrower companies, as pledgee, of an amount exceeding thirty per cent of paid-up share capital of those companies.
In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of the aforesaid provisions of the Act.
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