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RBI had issued a show-cause notice to Dhanlaxmi Bank for not having complied with KYC and AML guidelines with respect to a current account under investigation by the Economic Offences Wing, Mumbai. Photo: Pradeep Gaur/Mint
RBI had issued a show-cause notice to Dhanlaxmi Bank for not having complied with KYC and AML guidelines with respect to a current account under investigation by the Economic Offences Wing, Mumbai. Photo: Pradeep Gaur/Mint

RBI imposes Rs1 crore penalty on Dhanlaxmi Bank

The penalty is levied for violation of RBI's instructions, among other things, on know-your-customer norms and anti-money laundering standards

Mumbai: The Reserve Bank of India (RBI) on Thursday said it has imposed a 1 crore penalty on Dhanlaxmi Bank for violation of its instructions, among other things, on know-your-customer (KYC) norms and anti-money laundering (AML) standards.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank and its customers," the banking regulator said in a statement on its website.

RBI had issued a show-cause notice to Dhanlaxmi Bank for not having complied with KYC and AML guidelines with respect to a current account under investigation by the Economic Offences Wing (EOW), Mumbai.

Last year, EOW had begun investigating a fixed deposit scam where certain bank officials had helped outsiders make use of the bank’s overdraft facility to siphon off funds. It had arrested some former employees and a former director of Dhanlaxmi Bank in this connection.

“After considering the bank’s reply, as also personal submissions, information submitted and documents furnished, RBI came to the conclusion that the bank had violated the instructions/guidelines issued, from time to time, which warranted imposition of monetary penalty on it," the central bank said in its statement.

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