Cobrapost effect: RBI penalizes six more banks

Moneycontrol Bureau

The Reserve Bank of India (RBI) on Friday imposed penalty of Rs 50 lakh to 2 crore on six more state-owned banks for violation of Know Your Customer (KYC) and anti-money laundering (ALM) norms. Those public sector lenders included Allahabad Bank, Bank of Maharashtra, Corporation Bank, Dena Bank, IDBI Bank, and Indian Bank.

However, private sector lender IndusInd Bank escaped the wrath of the regulator. The bank was exonerated from alleged violations of norms. 

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"In respect of IndusInd Bank Ltd. where such scrutiny has been conducted and the bank's explanation called for, based on written or oral submissions, as the bank's reply was found to be satisfactory or no violation of serious nature has been established; it has been decided not to impose any monetary penalty but only to issue suitable cautionary letter," the RBI said in a release.

In July, the RBI had slapped penalty of nearly Rs 50 crore among 22 banks for the same reason, following its investigation.  Prior to that, the RBI had fined top three private sector lenders including ICICI bank, HDFC Bank and Axis Bank to the tune of Rs 1-5 crore.

Three/four months back, Cobrapost.com, an online magazine, had conducted a series of sting operations on banks and alleged large scale violation of KYC and ALM norms in the majority of banks.

Taking note of, the banking regulator had formed an investigation committee and carried out a scrutiny of books of accounts, internal control, compliance system of those banks.

The Reserve Bank of India had carried out a scrutiny of books of accounts, internal control, compliance systems and processes of these banks at their offices during April and May 2013.

"The scrutiny of these banks revealed violation of certain regulations and instructions issued by Reserve Bank of India, namely,non-adherence to certain aspects of know your customer (KYC) norms and anti money laundering (AML) guidelines like customer identification procedure, risk categorisation, periodical review of risk profiling of account holders, periodical KYC updation non-adherence of KYC norms for walk in customers," RBI said.

Saikat Das