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RBI Imposes Rs.31.8 Lakh Penalty on Indian Overseas Bank for Non-Compliance with PSL Norms.

Banking & Finance | Dated: 04 Oct 2025

In September 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of Rs.31.8 lakh on Indian Overseas Bank (IOB) for its non-compliance with the central bank’s directions on ‘Priority Sector Lending (PSL) – Targets and Classification’.

🎯 Key Highlights:

💡 Other Important Facts:

  • (i) The penalty was imposed under Section 47A(1)(c), read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949, empowering RBI to take action against banks violating regulatory provisions.
  • (ii) The penalty followed the Statutory Inspection for Supervisory Evaluation (ISE 2024) of IOB, conducted by the RBI based on its financial position as of March 31, 2024.
  • (iii) RBI’s inspection revealed that IOB had charged fees on certain Priority Sector Lending (PSL) loans of up to Rs.25,000, which was in violation of the prescribed PSL norms.

📚 Test Your Knowledge:

Which bank was recently fined by the RBI for non-compliance with Priority Sector Lending (PSL) norms?

Correct Answer: Indian Overseas Bank

🚀 Quick Recap:

About RBI

  • Governor : Sanjay Malhotra
  • Headquarter : Mumbai