RBI (Reserve Bank of India)imposed a penalty of Rs50 lakh on ICICI Bank and Rs25 lakh on Bank of Baroda (BoB)for violation of KYC (know your customer) norms after they allowed opening of accounts in the name of a statutory body by fraudsters. RBI has also cautioned SBI, Axis Bank and State Bank of Patiala in the same case.
“The RBI has imposed monetary penalty on the two banks for violation of its instructions, among other things, on know your customer/anti money laundering Know Your Customer (KYC) /Anti Money Laundering (AML),” the central bank said in statement.
RBI said it had received a complaint from a ‘reputed statutory organisation’ in August 2013 through which the details of a fraud perpetrated in five banks—SBI, ICICI Bank, BoB, Axis Bank and State Bank of Patiala.
The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the five banks. The accounts were operated mainly for encashing cheques/ demand drafts/postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks.
A scrutiny was undertaken in the five banks in January 2014 and, based on the findings, RBI issued a show-cause notice to each of these banks.
Empays Payment System, a provider of multi-bank payment systems, said its instant money transfer service has received authorisation from the Reserve Bank of India (RBI). “The Reserve Bank has awarded the IMT payment system certificate of authorisation under the Payments and Settlements Act 2007,” Empays’ release said.
The IMT payment system is a multi-bank mobile transfer solution that combines mobile phones and ATMs to reach the un-banked, making it a unique milestone in money transfers, payments and financial inclusion in India. The certificate enables the IMT payment system to access clearing and settlement arrangements between member-banks directly, thereby enabling the system to work across banks, the release added.
The Bombay High Court has directed the Insurance Regulatory and Development Authority (IRDA) to consider issuing appropriate instructions to all insurance companies to inform policyholders about remedies available to them in case of rejection or part-settlement of their claims.
A division bench of Chief Justice Mohit Shah and Justice BP Colabawalla directed the regulators also to consider asking risk firms to let policyholders know the reasons for its action on the claims. The directions were given during the hearing of a public interest litigation (PIL) filed by activist Gaurang Damani.