Axis Bank, HDFC Bank and ICICI Bank in focus after RBI penalty

Private sector banks Axis Bank, HDFC Bank and ICICI Bank will be in focus after the Reserve Bank of India (RBI) on Monday, 10 June 2013, said it has imposed a monetary penalty on these three private sector banks for violating Reserve Bank of India instructions. A penalty of Rs 5 crore has been imposed on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank.

The RBI had carried out a scrutiny of books of accounts, internal control, compliance systems and processes of these three banks at their corporate offices and some branches during March/April 2013 to investigate into the allegations of contravention of KYC/AML guidelines against them. The scrutiny of these three banks revealed violation of certain regulations and instructions issued by RBI such as non-observance of certain safeguards in respect of arrangement of at par payment of cheques drawn by cooperative banks, non-adherence to certain aspects of know your customer (KYC) norms and anti money laundering (AML) guidelines like risk categorisation and periodical review of risk profiling of account holders, non-adherence of KYC 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 and sale of gold coins for cash beyond Rs 50000, RBI said. Among other violations of the regulations by the three banks were not-obtaining of permanent account number (PAN) card details or form 60/61 as required, non-verification of source of funds credited to a few non-resident ordinary (NRO) accounts, failure to re-designate a few accounts as NRO accounts and non-submission of proper information called for by RBI.

The investigation did not reveal any prima facie evidence of money laundering, RBI said. 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, RBI said. A similar scrutiny was also conducted at the corporate offices of 36 other banks during April and May 2013. The process of follow up action in respect of these banks is at different stages of its completion, RBI said.

IT stocks may be in focus as the rupee on Monday, 10 June 2013 hit a record low against the dollar on broad gains in dollar after disappointing data from China and slightly better-than-expected US jobs data. The partially convertible rupee closed at 58.15/16 per dollar after earlier hitting a low of 58.17, a 1.9% fall from its Friday's close of 57.06/07. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

State-run oil exploration major ONGC withdrew a statement issued on Monday, 10 June 2013, saying its overseas oil exploration unit ONGC Videsh (OVL) and Oil India (OIL) had signed an agreement to buy a 10% stake in a Mozambique gas field viz. Rovuma Area 1 Offshore Block from Videocon Group for $2.48 billion. The company did not give the reason for the withdrawal. The field has the potential to become one of the world's largest liquefied natural gas (LNG) producing hubs by 2018, and is strategically located to supply gas to India at competitive prices, the withdrawn statement said.

Cadila Healthcare turns ex-dividend today, 11 June 2013, for an interim dividend of Rs 7.50 per share for the year ended March 2011.

Tata Coffee turns ex-dividend today, 11 June 2013, for final dividend of Rs 7.50 per share for the year ended March 2011.

A crucial meeting of FIPB today, 11 June 2013 which was to discuss the Jet-Etihad deal as well as the FDI proposal of Norway's telecom firm Telenor has been reportedly postponed to Friday, 14 June 2013.

Mastek and its subsidiary MajescoMastek launched Foresters, a life insurance provider and customer of the subsidiary company has successfully been deployed and is now in production with MajescoMastek's Elixir North America Policy Administration System and New Business & Underwriting solution.

Jayaswal Neco Industries informed that an accident occurred in one of its steel foundries at Nagpur on 8 June 2013. The operations of the steel foundry will remain disrupted for some time. The company said it does not anticipate any significant loss due to the accident. All other units under foundry division and the operations under steel plant division at Raipur continues to run unaffected, the company said in a statement.

The board of Pennar Industries approved buyback of the company's equity shares for an amount not exceeding Rs 10 crore. The maximum buyback price is set at Rs 40 per share. The company will buyback a minimum of 10 lakh equity shares and a maximum of 40 lakh equity shares from the open market.

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