RBI slaps Rs 6.5-cr penalty on 6 public sector banks for violating KYC norms

The Reserve Bank of India penalised six public sector banks of Rs 6.5 crore for violating Know Your Customer (KYC)/Anti Money Laundering (AML) guidelines of the central bank.

The six banks fined were Dena Bank (Rs 2 crore), Corporation Bank (Rs 1.5 crore), IDBI Bank and Indian Bank (Rs 1 crore each), Bank of Maharashtra and Allahabad Bank fined Rs 50 lakh each, according to RBI release.

In respect of IndusInd Bank where such scrutiny has been conducted and the bank’s reply was found to be satisfactory or no violation of serious nature has been established …and only issue a cautionary letter, RBI said.

Earlier this year, undercover investigations across various banks -- including top private lenders such as ICICI Bank, HDFC Bank and Axis Bank -- by online magazine Cobrapost alleged money laundering activities. Following this, 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 about 32 banks revealed violation of certain RBI regulations and instructions such as non-adherence to certain aspects of KYC and AML guidelines like customer identification procedure, risk categorisation, periodical review of risk profiling of account holders and periodical KYC updation.

In addition, banks were charged with violations relating to acceptance of cash above Rs 50,000 from customers for sale of gold coins and issue of Demand Drafts etc, non-adherence to instructions on import of gold on consignment basis and credit permits to Non-resident accounts among others.

However, the investigation did not reveal any prima facie evidence of money laundering and any conclusive inference in this regard can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies, the central bank said.