RBI slaps Rs4.5 crore penalty on Bank of Maharashtra, Dena Bank and OBC
Moneylife Digital Team 30 April 2015
RBI slapped a penalty of Rs1.5 crore each on BoM, Dena Bank and OBC for violating KYC norms while opening bogus accounts for a private organisation. Eight other PSBs are also warned to adhere to these norms 
 
The Reserve Bank of India (RBI) has imposed monetary penalty of Rs1.5 crore each on state-run Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce (OBC) for violating know your customer (KYC) or anti money laundering (AML) norms.
 
At the same time, the central bank warned eight other lenders Central Bank of India, Bank of India, Punjab and Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank, Union Bank of India and Vijaya Bank to adhere to its guidelines on KYC/AMC and put in place appropriate measures and review them from time to time to ensure strict compliance of requirements in future.
 
The case related to a Mumbai-based private organisation, whose name was used to open several accounts for fixed deposits (FDs) and overdraft (OD) facilities in various banks. Following a complaint from the organisation, RBI conducted an enquiry. The enquiry covering 12 branches of 11 public sector banks (PSBs) revealed deficiencies and irregularities while opening FDs and extending OD facility in Bank of Maharashtra, Dena Bank and OBC.
 
RBI found that these banks violated certain regulatory guidelines, like...
 
non-adherence to certain aspects of KYC norms of the Reserve Bank like customer identification and acceptance procedure
 
non-adherence to the Reserve Bank’s instructions on monitoring of transactions in customer accounts
 
non-adherence to the Reserve Bank’s instructions regarding funds received through Real Time Gross Settlement System (RTGS)
 
opening of fixed deposit accounts and granting overdrafts there against without due diligence or process 
 
weaknesses in the internal control systems, management oversight, use of internal accounts for parking customer funds, etc. 
 
involvement of middlemen/intermediaries in opening of the accounts as also subsequent operations in those accounts 
 
Based on the findings, the Reserve Bank issued a show cause notice to 11 banks. After checking the replies submitted by these banks, RBI concluded that some of the violations of serious nature were substantiated and warranted imposition of monetary penalty on three banks, namely, Bank of Maharashtra, Dena Bank and OBC. "Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and its impact," RBI said.
 
For others, RBI said based on these banks' written and oral submission, it decided not to impose any monetary penalty as their explanations were judged reasonable. "However, these banks have been cautioned to put in place appropriate measures and review the same from time to time to ensure strict compliance of KYC requirements in future," RBI said.
Comments
G.KRISHNASWAMY
7 years ago
The non adherence of KYC norms and anti-money laundering are being held in metro only, not in Urban, Semi Urban and rural areas. Why it is so. When other centres except metro, are strictly following the said both the norms while opening of accounts,why not possible to the same banks in metros. The RBI has to penalise not only the said banks, but also who are responsible for opening of those accounts. Then only it can be curtailed in the days to come.

Govindan Krishnaswamy, Bangalore.
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