RBI Penalizes Three Banks for Violations: Dhanlaxmi, Punjab and Sind, ESAF

In a recent announcement on January 12, the Reserve Bank of India (RBI) disclosed monetary penalties imposed on Dhanlaxmi Bank, Punjab and Sind Bank, and ESAF Small Finance Bank. The move is part of the central bank’s enforcement actions against rule violations in the banking sector.

1. Dhanlaxmi Bank (Penalty: Rs 1.20 Crore)

• Sanctioned loans against gold ornaments exceeding 75% of their value for non-agricultural purposes.
• Applied normal term deposit interest rates to senior citizen term deposits, in violation of prescribed norms.
• Failed to obtain PAN or Form 60 for specific term deposit accounts.
• Allocated multiple Customer Identification Codes instead of a Unique Customer Identification Code.

2. Punjab and Sind Bank (Penalty: Rs 1 Crore)

• Sanctioned a term loan to a Corporation without due diligence on project viability and revenue streams.
• Utilized budgetary resources for projects without ensuring sufficient revenue for debt servicing.

3. ESAF Small Finance Bank (Penalty: Rs 29.55 Lakh)

• Allowed Basic Savings Bank Deposit account holders to open additional savings accounts.
• Failed to close certain savings accounts within the stipulated 30 days from opening BSBD accounts.

Important Questions Related to Exams

1. What penalty did Dhanlaxmi Bank face, and for what specific violations?
2. Why was Punjab and Sind Bank penalized by the RBI, and what were the key issues highlighted?
3. What led to ESAF Small Finance Bank receiving a monetary penalty, and what regulatory breaches were identified?
4. In a separate action, why did RBI fine Sakthi Finance, and what were the specific shortcomings mentioned in the penalty?

Kindly share your responses in the comment section.