The Reserve Bank of India (RBI) on Tuesday imposed a fine of ₹31.8 lakh on Indian Overseas Bank for non-compliance with some rules related to 'Priority Sector Lending (PSL) – Targets and Classification'.
In its regular supervision, the central bank found cases where the bank was not abiding by PSL guidelines.
"Indian Overseas Bank has been levied a monetary penalty of Rs 31.80 lakh for non-adherence to certain directions issued by RBI on 'Priority Sector Lending (PSL) – Targets and Classification'," said the regulator.
The RBI also clarified that the penalty was levied under powers vested in Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
Following issuance of a show cause notice to the bank and consideration of its reply, further submissions and oral arguments at a personal hearing, the RBI held the allegations valid and resolved to act on the monetary penalty.
"After reading the reply of the bank to the notice, further submissions filed by it and submissions made orally during the personal hearing, RBI held the following charge against the bank was established, meriting levying of monetary penalty," the central bank added.
The RBI explained Indian Overseas Bank had charged loan-related charges on some PSL accounts, though the sanctioned amount of loans in those accounts was up to ₹25,000.
“The bank collected loan related charges in certain PSL accounts, each having sanctioned loan amount upto Rs 25,000,” the RBI said.
The regulator emphasized that the penalty is solely for lapses in regulatory compliance and does not impact the validity of any transactions or agreements between the bank and its customers.
"Action is founded on regulatory compliance shortcomings and is not intended to adjudicate upon the validity of any agreement or transaction entered into by the bank with its clients," it further said.
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