RBI Imposes Rs31.80 Lakh Penalty on Indian Overseas Bank
Moneylife Digital Team 01 October 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs31.80 lakh on Indian Overseas Bank (IOB) for failing to comply with certain directions regarding priority sector lending (PSL) targets and classification.
 
The statutory inspection of Indian Overseas Bank, conducted by RBI with reference to its financial position as of 31 March 2024, revealed that the lender had collected loan-related charges on certain PSL accounts, each with a sanctioned loan amount of up to Rs25,000.
 
After considering the lender’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI says the charges against Indian Overseas Bank are sustained, warranting imposition of a monetary penalty.
 
However, the banking regulator clarified that its action against Indian Overseas Bank is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transactions or agreements entered into by the Bank with its customers. Further, imposition of a monetary penalty is without prejudice to any other action that may be initiated against the Bank, RBI added.
 
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