The Reserve Bank of India (RBI) has imposed a penalty of Rs 27.5 lakh on Punjab & Sind Bank for non-compliance with certain directions issued by it on ‘external benchmark-based lending’.
A statutory examination of Punjab & Sind Bank revealed non-compliance with the directions, inter-alia, to the extent the bank linked certain floating rate retail loans and floating rate loans to micro and small enterprises, extended by it after October 1, 2019, to MCLR instead of an external benchmark. The penalty is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
Punjab & Sind Bank’s primary business is taking deposits, and making advances and investments, and is principally divided into retail banking, corporate banking, priority sector banking, treasury operations and other banking services such as agency functions for insurance, distribution of mutual funds and pension and tax collection services.
