 "RBI")
The Reserve Bank of India (RBI) has imposed a penalty of Rs 1 crore on public sector lender UCO Bank for breaches, including flouting instructions about opening current accounts.
Besides contravention of instructions relating to opening of current accounts, the Kolkata-based bank also provided bill discounting facilities to account holders without having any borrowing facility. This led to siphoning of funds, RBI said in a statement.
This action against the bank was based on deficiencies in regulatory compliance. It was not intended to pronounce upon the validity of any transaction or agreement entered into by the bank and its customers.
RBI had inspected books of accounts, internal control, compliance system and processes at one of the UCO Bank’s branches in May-June, 2015.
RBI has already imposed a fine of Rs 2 crore on UCO Bank in the foreign exchange scam. It was among 13 banks which were fined for violating know your customer and anti-money laundering norms.
The trigger for the RBI action was the Rs 6,000-crore foreign exchange scam unearthed at Bank of Baroda last year. However, later these accounts were traced to HDFC Bank where the fraud was believed to have originated. As part of this scam, funds were transferred to accounts in Hong Kong for certain import transactions that were not carried out.
