RBI Imposes Monetary Penalty On Federal Bank, PNB And Two NBFCs

The Reserve Bank of India (RBI) announced on Friday 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, respectively, as per the release.

The penalty was imposed on Punjab National Bank 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 penalised for issuing demand drafts, each valued at Rs fifty thousand and above, without including the name of the purchaser on the face of the drafts.

Kosamattam Finance was penalised for not maintaining a Loan-to-Value (LTV) ratio of 75 per cent 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 31 March 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.