No leniency for banks that are flouting norms: FinMin official

The Finance Ministry today asserted there is no question of showing any flexibility or giving benefit of doubt to banks found to have indulged in irregularities following an expose by a portal.
"There is absolutely no scope for benefit of doubt to be given to anybody who violates fundamentals like KYC norms and cash transaction limits, does not report suspicious transactions, advise customers to make Rs 49,999 transactions (to avoid quoting PAN and their reporting), and a dozen of them in one day, there is absolutely no scope for that. This is absolutely not done," Financial Services Secretary Rajiv Takru said here.

Takru said the extent of irregularities, which came to light following the expose by portal Cobrapost, is something which causes him "great trouble".
Late February, the investigative portal had come out with sting operations purportedly showing the readiness of executives at top private banks -- ICICI Bank, HDFC Bank and Axis Bank -- in not following standard know your customer (KYC) guidelines.
This resulted in a probe by the RBI, which revealed a slew of discrepancies in the banks' functioning.
The portal later came up with another set of sting operations showing officials at 20 other lenders indulging in similar practices.

In the past, officials from the Reserve Bank have called them "minor aberrations" which need to be corrected.

"There is no point in saying that these are minor aberrations here and there. The financial sector is founded on the principle of probity and trust. There is no scope whatsoever for any flexibility, any adaptability," Takru said.
Takru said one of the deterrents for banks might be raising the Rs 1 crore fine currently levied for violation of certain norms. He suggested hiking the amount to Rs 500 crore.
"The small fine is not the issue, the graveness of the offence is the issue," said the Secretary, who was here for a banking summit.