In the first week of July, the Reserve Bank of India (RBI) took action against five banks for not following various RBI rules. The latest bank to face a penalty was Punjab National Bank (PNB), which was fined Rs 1.31 crore. 

This penalty was because PNB did not follow RBI rules about loans and advances and the ‘Reserve Bank of India Know Your Customer (KYC) Direction, 2016.’

Before PNB, the RBI had penalized four cooperative banks in Gujarat, Madhubani, Bihar, Mumbai, and West Bengal for not following the rules. 

The penalties varied for each bank, showing a concerning pattern of not following the rules in the banking sector.

The RBI examined PNB’s financial position as of March 31, 2022, and found that it was not following RBI rules. The RBI then told PNB to explain why it should not be fined.

After PNB responded and had a hearing, the RBI still thought the bank should be fined. The RBI said that PNB gave loans to two state government-owned companies when it wasn’t supposed to and that PNB didn’t keep good records of its customers’ identification and addresses.

The RBI took strict action because PNB did not follow the rules.