June 11, 2013 / 09:52 IST
Moneycontrol Bureau
The Reserve Bank of India (RBI) on Monday slapped Rs 1 - 5 crore fine on three large private sector lenders -
ICICI Bank,
HDFC Bank and
Axis Bank for violating norms. The central bank was investigating into the allegations of KYC (Know Your Customer)/AML (Anti-money Laundering) norms.
In April this year, online news website - Cobrapost.com had carried a series of sting opeartions alleging lapses in the banking system in terms of KYC violations and ALM.
RBI slapped a fine of Rs 5 crore on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank.
"Based on the findings of the scrutiny, the Reserve Bank issued a show cause notice to each of these banks, in response to which the individual banks submitted written replies," RBI said in a release on Monday.
"After considering the facts of each case and individual bank's reply, as also, personal submissions, information submitted and documents furnished, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty."
It was learnt that a core RBI investigation committee was visiting all corporate offices of banks involved in the allegations and asking for various documents. Even, it inspected remote branches across the country without any notice, to check regulatory compliance.
Some of the key deviations that RBI has traced include non-adherence to certain aspects of KYC/AML guidelines, PAN card issues, non-observance, omission to report cash transactions, and KYC non-compliance for sale of third party products.
A similar scrutiny was also conducted on 36 other between April and May 2013. The final outcome is yet to be revealed. The process of follow up action is at different stages of its completion.
However, the penalty amount looks paltry especailly when compared with the size of those erring banks. For example, total business (loans plus deposits) stood at about 6 lakh crore for ICICI Bank, which will pay a fine of Rs one crore.
Similarly, HDFC Bank will pay a fine of Rs 4.50 crore and its total business was at around Rs 5.40 lakh crore as on March 31, 2013. Axis Bank have to pay Rs 5 crore while total book was at Rs 4.50 lakh crore.
Although the amount of fine depends on the nature and gravity of norm violations, the current rate of penalties are less as compared to global standard.
RBI governor D Subbarao recently commented that penalties for such offences in India amounted to "peanuts" compared to those in the western countries. Financial services secretary Rajiv Takru said that the government was planning to increase the slab of differnet penalties.
saikat.das@network18online.com 
