On September 30, 2025, the Reserve Bank of India (RBI) announced a monetary penalty of ₹31.80 lakh on Indian Overseas Bank for non-compliance with certain directions issued by RBI on 'Priority Sector Lending (PSL) - Targets and Classification'.
The penalty was imposed following a Statutory Inspection for Supervisory Evaluation (ISE 2024) conducted by RBI with reference to the bank’s financial position as on March 31, 2024. The RBI found the bank collected loan-related charges in certain PSL accounts, each having a sanctioned loan amount up to ₹25,000/-.
The penalty was imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
The press release number is 2025-2026/1211. Contact Puneet Pancholy, Chief General Manager.
Key Entities Referenced
Reserve Bank of India (RBI): The entity imposing the monetary penalty.
Indian Overseas Bank: The bank on which the monetary penalty is imposed.
Priority Sector Lending (PSL): The area of non-compliance leading to the penalty.
Banking Regulation Act, 1949: The law under which the penalty is imposed.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
September 30, 2025
RBI imposes monetary penalty on Indian Overseas Bank
The Reserve Bank of India (RBI) has, by an order dated September 29, 2025,
imposed a monetary penalty of ₹31.80 lakh (Rupees Thirty One Lakh Eighty
Thousand only) on Indian Overseas Bank (the bank) for non-compliance with certain
directions issued by RBI on ‘Priority Sector Lending (PSL) – Targets and
Classification’. This penalty has been imposed in exercise of powers conferred on
RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of
the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation (ISE 2024) of the bank was
conducted by RBI with reference to its financial position as on March 31, 2024.
Based on supervisory findings of non-compliance with RBI directions and related
correspondence in that regard, a notice was issued to the bank advising it to show
cause as to why penalty should not be imposed on it for its failure to comply with the
said directions.
After considering the bank’s reply to the notice, additional submissions made by it
and oral submissions made during the personal hearing, RBI found, inter alia, that
the following charge against the bank was sustained, warranting imposition of
monetary penalty:
The bank collected loan related charges in certain PSL accounts, each having
sanctioned loan amount upto ₹25,000/-.
The action is based on deficiencies in regulatory compliance and is not intended
to pronounce upon the validity of any transaction or agreement entered into by the
bank with its customers. Further, imposition of monetary penalty is without prejudice
to any other action that may be initiated by RBI against the bank.
(Puneet Pancholy)
Press Release: 2025-2026/1211 Chief General Manager