RBI slaps Rs 5-lakh penalty on JPMorgan for FY12 breaches

The penalty has been imposed for contraventions of various RBI instructions on risk management

The Reserve Bank of India (RBI) has slapped a penalty of Rs 5 lakh on JPMorgan India for violating risk management norms in 2011-12.

“The penalty has been imposed for contraventions of various directions and instructions (issued by the central bank) in respect of risk management and inter-bank dealings and compliance functions,” RBI said.  

Also in 2011, in a separate case, JPMorgan was fined a similar amount for contravention of RBI instructions on derivatives, such as failure in due diligence on the suitability of products and selling these to users not having risk management policies

After JPMorgan’s reply to the showcause notice of RBI, the central bank found the violations were conclusively established. “We note the central bank’s concern and have taken remedial action,” JPMorgan announced.

JPMorgan is primarily involved in investment banking and corporate finance activity in India through its only branch, in this city. It had applied to open one more branch in the country. The US-based lender will also start retail banking in a small way.

In October 2012, the central bank had slapped a penalty of Rs 30 lakh on ICICI Bank and Rs 55 lakh on ING Vysya Bank for flouting know-your-customer (KYC) and anti-money laundering guidelines. Citibank was fined Rs 15 lakh for violating KYC norms in 2011, after a fraud at its Gurgaon branch was reported, allegedly committed by one of its employees. In 2011, 19 banks, including State Bank of India and ICICI Bank, and 11 foreign banks were fined for failing to comply with guidelines on derivative products.