RBI Imposes Rs 25 Lakh Penalty on Punjab & Sind Bank
Moneylife Digital Team 07 July 2021
The Reserve Bank of India (RBI) has imposed a penalty of Rs 25 lakh on Punjab & Sind Bank for non-compliance with certain provisions of cyber security framework for banks issued by the banking regulator in 2016.
 
The Punjab & Sind Bank had reported a few cyber incidents to RBI on 16 May 2020 and 20 May 2020. The RBI said that examination of the incident reports and the report of the forensic analysis of the said incidents, revealed, non-compliance with aforesaid directions.
 
Accordingly, the banking regulator had issued a show cause notice to the bank asking it why penalty should not be imposed for non-compliance with the directions issued by the RBI.
 
"After considering the bank's reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications/documents furnished by the bank, RBI came to the conclusion that to the extent the charges of non-compliance with RBI directions were substantiated, it warranted imposition of monetary penalty," the central bank said in its release.
 
The penalty  of Rs 25 lakh was imposed for deficiencies in regulatory compliance and was not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, the central bank said.
 
"This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949," it added.
 
On 29th June, the RBI had imposed penalties on four co-operative banks, including a Rs 112.50 lakh fine on Hyderabad-based Andhra Pradesh Mahesh Co-operative Urban Bank, for contravention of certain regulatory directions. 
 
A penalty of Rs 62.50 lakh has been imposed on The Ahmedabad Mercantile Co-operative Bank, Ahmedabad; Rs 37.50 lakh on SVC Co-operative Bank, Mumbai; and Rs 25 lakh on Saraswat Cooperative Bank, Mumbai.
 
The penalty on Andhra Pradesh Mahesh Co-operative Urban Bank was for non-compliance with directions issued by RBI contained in Master Directions on 'Interest Rate on Deposits' and 'Know Your Customer'. The Ahmedabad Mercantile Co-operative Bank has been penalised for violation of norms contained in Master Directions on 'Interest Rate on Deposits'.
 
As per the RBI, it imposed penalty on SVC Co-operative Bank for non-compliance with directions on 'Interest Rate on Deposits' and 'Frauds Monitoring and Reporting Mechanism'. 
 
Saraswat Cooperative Bank was penalised for non-compliance with directions on 'Interest Rate on Deposits' and 'Maintenance of Deposit Accounts'.
 
According to the RBI, the penalties have been imposed for based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.
 
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