ICICI Bank, Bank of Baroda fined for flouting KYC norms

The Reserve Bank of India (RBI) has imposed penalties on ICICI Bank and Bank of Baroda (BoB) for violating Know Your Customer (KYC) and anti-money laundering norms.

ICICI Bank has been slapped with a fine of Rs 50 lakh, while BoB has been levied a fine of Rs 25 lakh.

The regulator said the banks were fined on three grounds — non-adherence to KYC norms such as customer identification and acceptance procedure; internal norms regarding customer identification procedure of a bank not in line with the directions issued by RBI; and, non-adherence to instructions on monitoring of transactions in customer accounts.

RBI had conducted a scrutiny on the banks in January 2014. The checks were made after receiving a complaint from a statutory organisation in August 2013, RBI said.

“The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts mainly for encashing cheques/demand drafts/postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks,” it said in a notification issued on Wednesday.

After the investigations, a showcause notice was served on the banks, but ICICI Bank and BoB’s replies were found to be unsatisfactory.

However, in the case of State Bank of India, State Bank of Patiala and Axis Bank, RBI found the explanations “reasonable” and the three lenders were left off with a warning to review their KYC requirements in the future.

RBI typically slaps a penalty of Rs 5 lakh for a single violation.

In July last year, the central bank had fined 22 banks for violations of KYC norms. The fines ranged between Rs 50 lakh and Rs 3 crore.