Follow KYC norms or face penalty, RBI tells banks

Banks are required to strictly adhere to KYC norms, Anti-Money Laundering standards, Combating of Financing of Terrorism, obligation of banks under Prevention of Money Laundering Act, 2002, the RBI said in a notification

Mumbai: The Reserve Bank of India (RBI) on Monday asked banks to strictly follow the Know Your Customer (KYC) norms or Anti-Money Laundering (AML) standards, failing which it will take penal action, reports PTI.

“Any contravention thereof or non-compliance shall attract penalties under Banking Regulation Act, 1949,” RBI said in a notification.

Banks are required to strictly adhere to KYC norms, Anti-Money Laundering (AML) standards, Combating of Financing of Terrorism (CFT), obligation of banks under Prevention of Money Laundering Act (PMLA), 2002, it said.

RBI said banks are required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers.

Banks and financial institutions should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach, it said.

As a corollary, banks would be required to adopt enhanced measures for products, services and customers with a medium or high risk rating, it added.

In this regard, it said, Indian Banks’ Association (IBA) has taken initiative in assessment of money laundering and financial terror and risk in the banking sector.

The IBA guidance also provides an indicative list of high risk customers, products, services and geographies. Banks may use the same as guidance in their own risk assessment, it added.

User

RBI allows MFIs to raise $10 million through ECBs

“Considering the specific needs of the microfinance sector, the existing ECBs policy has been reviewed in consultation with the Government of India and it has been decided that MFIs may be permitted to raise ECB up to $10 million or equivalent during a financial year for permitted end-uses, under the automatic route,” RBI said in a notification

Mumbai: The Reserve Bank of India (RBI) on Monday allowed microfinance institutions (MFIs) to raise up to $10 million through external commercial borrowings (ECBs), as against the earlier limit of $5 million, a move that will widen their fund raising sources, reports PTI.

“Considering the specific needs of the microfinance sector, the existing ECBs policy has been reviewed in consultation with the Government of India and it has been decided that microfinance institutions (MFIs) may be permitted to raise ECB up to $10 million or equivalent during a financial year for permitted end-uses, under the automatic route,” RBI said in a notification.

It has also been decided that non-government organisations (NGOs) engaged in microfinance activities can avail of ECB up to $10 million or equivalent per financial year under the automatic route, up from $5 million or equivalent, RBI said.

Of late, the MFI sector has been facing liquidity crunch resulting in the RBI announcing a working group on restructuring of loans.

Last week, RBI deputy governor HR Khan had said, “all MFIs of all hues will now be permitted to take ECB of (up to) $10 million.”

“Of course, they have to be hedged. If you don’t hedge you get into difficulties,” Mr Khan had said.

As part of eligibility criteria, the MFIs registered as societies, trusts and co-operatives and engaged in microfinance should have a satisfactory borrowing relationship for at least three years with a scheduled commercial bank authorised to deal in foreign exchange.

MFIs would require a certificate of due diligence on ‘fit and proper’ status of the board of the borrowing entity from the designated authorised dealer bank.

The notification further said ECB funds should be routed through normal banking channels. NBFC-MFIs will be permitted to avail of ECBs from multilateral institutions, such as IFC, ADB, etc.

Companies registered under Section 25 of the Companies Act and engaged in microfinance will be permitted to avail of ECBs from international banks, multilateral financial institutions, export credit agencies, foreign equity holders, overseas organisations and individuals, it said.

User

Ministers “clean up” draft of Lokpal Bill changes

The law minister said the government would bring the Lokpal Bill in the current session. There may not be any need to extend it, he felt. He said the final architecture of the changed Bill would be known only after the Cabinet approves it and sends it to Parliament for consideration

New Delhi: A group of senior Indian ministers Monday “cleaned up” the draft of the changes in the Lokpal Bill, which law minister Salman Khurshid says will be introduced in Parliament during the current session, reports PTI.

After a high-level meeting of ministers chaired by home minister P Chidambaram, Mr Khurshid told reporters that “we have finished the cleaning up of the draft. We had instructions to clean up the draft and we have cleaned up the draft”.

He said the actual drafting and finishing of the drafting work is being done by officials and as soon as it is ready, the bill will go to the Cabinet once the prime minister gives the signal.

To a question, Mr Khurshid said the Cabinet was unlikely to meet tonight as the officials have to work on the draft.

“I hope it will be the last night they will have to stay awake (to work on the draft),” he said.

He said the draft changes would go to the Cabinet for approval before which prime minister Manmohan Singh and finance minister Pranab Mukherjee would have a look at it.

The law minister said the government would bring the Lokpal Bill in the current session. There may not be any need to extend it, he felt.

He said the final architecture of the changed Bill would be known only after the Cabinet approves it and sends it to Parliament for consideration.

Apart from Mr Chidambaram, Mr Khurshid and telecom minister Kapil Sibal were present in the meeting to finalise the changes. The three ministers, who are lawyers, were also part of the Joint Drafting Committee which discussed the Lokpal Bill with Team Anna members.

Minister of state for personnel V Narayansamy was also part of the ministerial meeting Monday.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)