The Reserve Bank of India has penalised ICICI Bank and Bank of Baroda for violating norms governing know-your-customer (KYC) and anti-money laundering, the central bank said in a notice on Wednesday. The fine was R50 lakh for ICICI Bank and R25 lakh for Bank of Baroda.
Five banks — State Bank of India, ICICI Bank, Bank of Baroda, Axis Bank and State Bank of Patiala — were scrutinised in January by the RBI for discrepancies and frauds by bank officials. The scrutiny was on the basis of a complaint by a reputed statutory organisation, the RBI said in its notice.
“Based on the findings of the scrutiny, the Reserve Bank issued a showcause notice to each of these banks, in response to which the individual banks submitted written replies,” RBI said.
The RBI found the replies by SBI, Axis Bank and State Bank of Patiala to be reasonable and decided not to penalise them. However, the central bank found that ICICI Bank and Bank of Baroda failed to take remedial measures, which aggravated the seriousness of the violations.
The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts mainly for encashing cheques or demand drafts and postal orders of which they were not rightful owners, for periods ranging from one month to two years, without being detected by the banks.
The RBI cautioned SBI, Axis Bank and State Bank of Patiala, telling them to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC norms.
This round of penalties for violation of KYC norms comes after a gap of one year. In July 2013, the central bank had slapped 22 banks with penalties on such violations. The penalties followed allegations by a news website, Cobrapost, in March over serious frauds by bank officials.
The website had posted various videos of its sting operation showing bank officials offering money laundering services.