The Reserve Bank of India (RBI) has imposed a penalty of Rs6 crore on Bank of India (BoI) and Punjab National Bank (PNB) for contravention of norms, including one related to ‘frauds - classification and reporting’. A penalty of Rs4 crore has been imposed on Bank of India and Rs2 crore on Punjab National Bank.
In a statement, the RBI says the statutory inspection for supervisory evaluation (ISE) of Bank of India was conducted with reference to its financial position as on 31 March 2019. BoI had also conducted a review and submitted a fraud monitoring report (FMR) dated 1 January 2019 pertaining to detection of fraud in an account.
Examination of the risk assessment report pertaining to the ISE and the FMR revealed non-compliance with or contravention of directions, like breach of stipulated transaction limits; delay in transfer of unclaimed balances to depositor education and awareness fund (DEA Fund); delay in reporting a fraud to RBI and sale of a fraudulent asset, the central bank statement says.
In a separate statement, RBI says the statutory ISE of Punjab National Bank was conducted with reference to its financial position as on 31 March 2018 (ISE 2018) and 31 March 2019 (ISE 2019).
The examination of the risk assessment reports pertaining to ISE 2018 and 2019 revealed non-compliance with or contravention of the aforesaid directions, viz., delay in reporting of frauds and not ensuring data accuracy and integrity while submitting data on central repository of information on large credits (CRILC) platform to RBI.
In both cases, show cause notices were issued as to why penalty should not be imposed on them for such violations of the directions.
However, the banking regulator added that the penalties have been imposed on both these banks based on the deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into them with their customers.