RBI slaps Rs 6.5 cr penalty on 6 PSU banks for KYC violations

The RBI today imposed a fine of Rs 6.5 crore on six public sector banks including IDBI Bank, Dena Bank and Indian Bank, for violation of customer identification or KYC norms and anti-money laundering guidelines.

The other three banks found to be violating KYC norms are Allahabad Bank, Bank of Maharashtra and Corporation Bank.

Dena Bank has been slapped a penalty of Rs 2 crore while Rs 1.5 crore has been imposed on Corporation Bank. IDBI Bank and Indian Bank have been slapped with penalty of Rs one crore each, where as Allahabad Bank and Bank of Maharashtra have been fined Rs 50 lakh each.

The central bank imposed the monetary penalty on the six banks "for violation of Reserve Bank of India instructions, inter alia, on Know Your Customer/Anti Money Laundering".

The penalty follows scrutiny of books of accounts, internal control, compliance systems and processes of these banks at their offices by RBI during April and May 2013.

"The investigation did not reveal any prima facie evidence of money laundering. However, 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 RBI added.

The scrutiny revealed violation of regulations and instructions, like non-adherence to certain aspects of KYC) norms and anti money laundering (AML) guidelines, RBI said.

The banks, RBI said, violated customer identification procedure, risk categorisation, KYC norms for walk in customers including for sale of third party products, omission in filing of cash transaction reports (CTRs) in respect of some cash transactions.

The scrutiny also found non-adherence to instructions which prohibit acceptance of cash above Rs 50,000 from customers for sale of gold coins and issue of Demand Drafts and instructions on permitted credits to Non-resident accounts.

Earlier also the RBI had imposed monetary penalty for almost similar violations on 25 banks, including ICICI Bank, HDFC Bank, Axis Bank, Yes Bank, SBI, Punjab National Bank, Canara Bank, Bank of Baroda and Bank of India.

RBI had also carried such scrutiny at private sector IndusInd Bank and the bank's explanation was called for.

"As the bank's reply was found to be satisfactory or no violation of serious nature has been established; it has been decided not to impose any monetary penalty but only to issue suitable cautionary letter," the RBI added.