Page 9 - Banking Finance May 2019 N

RBI CORNER

RBI slaps Rs. 2 crore pen- RBI goes for a second straight rate cut in bid to boost
alty on PNB growth
RBI carried out a second successive interest rate cut in a span of two months
while maintaining a neutral monetary
policy stance, reflecting the central
bank's concerns about sluggish economic
growth in India and abroad. The central
bank cut its benchmark repo rate by 25
basis points (bps) to 6%. One basis point
is one-hundredth of a percentage point.
The RBI has slapped a penalty of Rs The central bank's first bimonthly policy
2 crore on Punjab National Bank statement for 2019-20 stated unambiguously, "The need is to strengthen do-
(PNB) for non-compliance of regula- mestic growth impulses by spurring private investment, which has remained
tory directions with regard to SWIFT sluggish."
operations. SWIFT is a global messag-
ing software used for transactions by Coupled with a 25 bps rate cut in February, and its decisive action on liquidity
financial entities. The massive Rs infusion into the system recently through a combination of instruments, RBI is
14,000-crore fraud perpetrated by clearly looking to use monetary tools to stimulate economic growth. In addi-
billionaire jeweller Nirav Modi and tion, a benign inflationary environment has helped the central bank edge into
his uncle Mehul Choksi at the PNB an expansionary monetary space. The monetary policy committee (MPC) mem-
bers voted 4-2 in favour of the RBI rate cut and 5-1 in favour of maintaining the
was a case of misuse of this messag-
ing software. neutral stance of monetary policy.
RBI's concerns about the slowing Indian economy are echoed in its revised
In a regulatory filing, the PNB said
the Reserve Bank in a letter dated macroeconomic projections. The central bank has revised its retail inflation pro-
March 25 has informed the bank jections downwards from its February estimates: 2.4% for Q4 of 2018-19 (against
about the penalty. 2.8% in February) and 2.9-3% for the first six months of 2019-20 (3.2-3.4% ear-
lier).
"In the matter of violations of regu-
latory directions by Punjab National RBI slaps Rs 11 lakh fine on Yes Bank for violating
Bank observed during assessment of
implementation of SWIFT- related op- money transfer norms
erational controls, the Reserve Bank Reserve Bank of India has imposed a penalty of Rs 11.25 lakh on Yes Bank for
of India, (imposes) an aggregate violating money transfer norms. "Reserve
penalty of Rs 20 million ... on Punjab Bank of India (RBI) vide its speaking order
National Bank," it said. dates April 22, 2019, imposed a penalty
Earlier this year, the Reserve Bank of Rs 11,25,000 under the Payment and
had imposed penalties worth Rs 71 Settlement Systems Act, 2007," Yes bank
crore on 36 public, private and for- said in a regulatory filing.
eign banks for non-compliance with The RBI has identified certain violations of
various directions on time-bound its circular of 2011 on Domestic Money
implementation and strengthening Transfer - Relaxations and master directions issued in October 2017 on issuance
of SWIFT operations. and operation of prepaid payment instruments in connection with certain prod-
However, the list did not include uct features for an open loop prepaid card (co-branded) previously issued by
PNB. The major banks which were the bank, Yes Bank said.
fined by the regulator included SBI, The bank said it had launched this product as a pilot programme from Septem-
ICICI Bank, HSBC, Bank of Baroda, ber 13, 2017, and, later, discontinued this product with effect from March 14,
Citibank, Canara Bank and Yes Bank. 2018, it said.

BANKING FINANCE | MAY | 2019 | 9