After many flip-flops, the Reserve Bank has fined the three largest private sector lenders for flouting the know-your-customer rules while attracting high networth individuals who were trying to dodge the taxmen.
The regulator slapped Rs 5 crore on Axis Bank, which has been found to have violated the maximum number of times the KYC norms; Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank. The penalties came after an RBI probe into the sting operations made by the newsportal Cobrapost in early March alleging that these banks violated with impunity KYC norms and anti-money laundering guidelines. The portal then implicated the rest of the banks and financial institutions like the SBI, LIC and also foreign banks for the same. The RBI is probing these banks also now.
"After considering the facts of each case … the Reserve Bank came to conclusion that some of the violations were substantiated and warranted imposition of monetary penalty…"the central bank said in a statement. The penalty follows scrutiny carried out by RBI of books of accounts, internal control, compliance systems and processes of these three banks at their corporate offices and some branches during March/April 2013.
Although the investigation did not reveal any prima facie evidence of money laundering, RBI said, "any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies." RBI further said that a similar scrutiny was being conducted at corporate offices of 36 other banks and "the process of follow up action in respect of these banks is at different stages of its completion."
