Select private sector banks decline after RBI penalty

HDFC Bank (down 1% to Rs 670.45), Axis Bank (down 2.09% to Rs 1,328) and ICICI Bank (down 3.69% to Rs 1077) declined.

Meanwhile, the S&P BSE Sensex was down 274.59 points or 1.41% to 19,166.48

Axis Bank underperformed the market over the past one month till 10 June 2013, falling 7.64% compared with the Sensex's 3.19% decline. The scrip also underperformed the market in past one quarter, sliding 3.62% as against Sensex's 1.23% fall.

HDFC Bank underperformed the market over the past one month till 10 June 2013, falling 3.61% compared with the Sensex's 3.19% decline. The scrip, however, outperformed the market in past one quarter, rising 3.08% as against Sensex's 1.23% fall.

ICICI Bank underperformed the market over the past one month till 10 June 2013, falling 4.1% compared with the Sensex's 3.19% decline. The scrip also underperformed the market in past one quarter, sliding 1.79% as against Sensex's 1.23% fall.

The Reserve Bank of India (RBI) on Monday, 10 June 2013, said it has imposed a monetary penalty on private sector banks Axis Bank, HDFC Bank and ICICI Bank for violating RBI 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.

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