RBI Imposes Penalty on Three Banks; Cautions Eight

The Reserve Bank of India has imposed monetary penalty on the Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce for violation of Reserve Bank of India instructions, on Know Your Customer (KYC)/ Anti Money Laundering (AML).

The amount these banks need to pay as penalty is Rs Rs 4.5 crore. Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and its impact, said in the statement.

Eight other banks, namely, Central Bank of India, Bank of India, Punjab and Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank, Union Bank of India and Vijaya Bank.

These have been cautioned to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.

The findings revealed violation of certain regulatory guidelines issued by the Reserve Bank as also other disquieting actions on the part of the banks, as under:

• Non-adherence to certain aspects of KYC norms of the Reserve Bank like customer identification and acceptance procedure
• Non-adherence to the Reserve Bank's instructions on monitoring of transactions in customer accounts
• Non-adherence to the Reserve Bank's instructions regarding funds received through Real Time Gross Settlement System (RTGS)
• Opening of fixed deposit accounts and granting overdrafts there against without due diligence or process
• Weaknesses in the internal control systems, management oversight, use of internal accounts for parking customer funds, etc.
• Involvement of middlemen/intermediaries in opening of the accounts as also subsequent operations in those accounts