RBI, in its statutory inspection, has found that PNB has "sanctioned working capital demand loans to two state government-owned corporations against the amount to be received from the government by way of subsidy/refund/reimbursement."

PNB also failed to preserve records relating to the identity and addresses of customers obtained during business relations in some accounts.

RBI also said that the action against PNB is based on deficiencies in regulatory compliance and is not intended to unravel the validity of any transaction or agreement entered into by the bank with its customers.