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The RBI in a notification said that the bank has not followed instructions for violating Know Your Customers (KYC)/Anti Money Laundering (AML) Guidelines in issuing 'at par cheques' to large number of walk-in-customers by intentionally structuring them below Rs 50,000. Further, it had opened benami accounts and allowed huge cash deposits in such accounts.
The Reserve Bank of India had issued a Show Cause Notice to the bank, in response to which the bank submitted a written reply.
After considering the facts of the case and bank's reply in the matter, the Reserve Bank came to the conclusion that the violations were established beyond doubt and warranted imposition of the penalty.