Penalty on PNB: RBI found that Punjab National Bank sanctioned working capital demand loans to 2 state government-owned corporations in lieu of the amount received from the government by way of subsidy/refund/reimbursement. RBI has cancelled the license of Karnataka-based Shimsha Sahakara Bank Niyamitra, Maddur due to its deteriorating financial condition
The Reserve Bank of India (RBI) has imposed a penalty of Rs 1.31 crore on Punjab National Bank (PNB). This fine has been imposed for non-compliance of certain instructions related to KYC and ‘Loans and Advances’. The Reserve Bank said that it conducted a statutory inspection with reference to the financial position of the bank as on March 31, 2022. After that a notice was issued to the bank. After considering the reply of Punjab National Bank to the notice, RBI found that PNB sanctioned working capital demand loans to 2 state government-owned corporations in lieu of the amount received from the government by way of subsidy/refund/reimbursement.
The Reserve Bank said that PNB also failed to save records related to the identity and address of customers received during the business relationship in some accounts. However, the central bank said that this fine imposed on PNB is based on deficiencies in regulatory compliance and is not intended to have any effect on the validity of any transaction or agreement made by the bank with its customers.
Shimsha Sahakara Bank Regular’s license canceled
Apart from this, RBI has canceled the license of Karnataka-based Shimsha Sahakara Bank Regular, Maddur in view of its deteriorating financial condition. RBI said in a statement that the bank will stop banking operations after the end of working hours on July 5, 2024. The Registrar of Cooperative Societies of Karnataka has also been requested to issue an order to close this cooperative bank and appoint a liquidator for the bank.
Every depositor of Shimsha Sahakara Bank Niyam will be entitled to get a claim amount of up to Rs 5 lakh on his deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Let us tell you that if a bank sinks, goes bankrupt or its license is canceled, then the depositor’s total deposit of up to Rs 5 lakh in that bank is safe.
Continuation of the bank’s functioning is detrimental to the interests of the depositors
RBI has said that about 99.96 percent of the depositors of Shimsha Sahakara Bank Niyam are entitled to receive the full amount of their deposits from DICGC. The bank does not have adequate capital and earning prospects. Its continuation of functioning is detrimental to the interests of its depositors. According to the statement, “Due to its current financial position, the bank will be unable to make full payment to its depositors.”
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