RBI imposes monetary penalty on PNB, Federal Bank, 2 NBFCs

Reserve Bank of India

The Reserve Bank of India (RBI) announced on November 3 that it has imposed monetary penalties on Punjab National Bank, Federal Bank, Kosamattam Finance, and Mercedes-Benz Financial Services India for rule violations.

The central bank has imposed a penalty of Rs 72 lakh on Punjab National Bank, Rs 30 lakh on Federal Bank, Rs 13.38 lakh on Kosamattam Finance, and Rs 10 lakh on Mercedes-Benz Financial Services, according to the release.

Punjab National Bank received the penalty due to several violations, including levying SMS charges on certain accounts despite maintaining invalid mobile numbers in the Core Banking Solution (CBS), not strictly adhering to the interest rates as per the pre-disclosed schedule in several term deposit accounts, and failing to specify the interest reset date in MCLR-linked loans.

Federal Bank was penalized for issuing demand drafts, each valued at rupees fifty thousand and above, without including the name of the purchaser on the face of the drafts.

Kosamattam Finance was penalized for not maintaining a Loan-to-Value (LTV) ratio of 75 percent in certain loan accounts during the fiscal year 2021-22.

Mercedes-Benz Financial Services India received a penalty for failing to conduct ongoing due diligence of its customers and for not updating the Know Your Customer (KYC) information of its high-risk customers as of March 31, 2021.

In response, notices were issued to the companies and the bank, advising them to provide reasons as to why a penalty should not be imposed for their failure to comply with the RBI's directions, as stated in the notice.