The Reserve Bank of India (RBI) has levied a penalty of Rs 1.5 crore each on three banks-- Dena Bank, Oriental Bank of Commerce and Bank of Maharashtra-- for violation of Know Your Customer (KYC) and non adherence of RBI norms on fund transfer, transactions and opening of fixed deposits. In aggregate, three banks have to pay Rs 4.5 crore fine for failing to comply with the guidelines.
Besides, India’s central bank also has warned eight other PSBs 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 put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.
India’s central bank’s penal action was based on the basis of complaint received from a private organization, while the fine imposed is on basis of deficiencies in regulatory compliance. The RBI, based on the complaints received, a wider thematic review was conducted and in all 12 branches of 11 public sector banks were covered.
The scrutiny revealed alleged frauds involving accounts of certain organizations in these banks, deficiencies or irregularities while opening Fixed Deposits (FDs) and extending Overdraft (OD) facility there against. Besides, RBI also found involvement of middlemen or intermediaries in opening of the accounts as also subsequent operations in those accounts. It was based on these finding, RBI issued show cause notices to 11 banks.