RBI imposes fine on ICICI Bank and Bank of Baroda

The banks have been fined for violations of RBI's instructions on know-your-customer and anti-money laundering norms

Vishwanath Nair
Updated18 Dec 2014
The Reserve Bank of India imposed a fine worth `50 lakh on ICICI Bank. Photo: Ramesh Pathania/Mint<br />
The Reserve Bank of India imposed a fine worth `50 lakh on ICICI Bank. Photo: Ramesh Pathania/Mint

Mumbai: The Reserve Bank of India (RBI) on Wednesday said that it imposed fines worth 50 lakh and 25 lakh on ICICI Bank and Bank of Baroda, respectively, for violations of its instructions on know-your-customer (KYC) and anti-money laundering norms.

Three other banks including State Bank of India, Axis Bank and State Bank of Patiala, have also been cautioned to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.

In a statement on its website, the banking regulator said the regulatory action came in response to a complaint that RBI had received from a ‘reputed statutory organization’ in August 2013, regarding a fraud perpetrated at the five banks in connivance with certain officials of the said organizations.

“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/demand drafts/postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks,” RBI said in its statement.

Following a scrutiny of the five banks in January, the central bank found details regarding violations of certain regulatory guidelines at these banks, namely non-adherence to KYC norms like customer identification and acceptance procedure, internal norms regarding customer identification and non-adherence regarding monitoring of transactions in customer accounts.

After considering the facts of each case and individual bank’s reply, RBI came to the conclusion that some of the violations were serious in nature and warranted monetary penalty on ICICI Bank and Bank of Baroda.

“Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and their impact,” the central bank noted.

In case of the remaining three banks, the banking regulator had found that their explanations, regarding the circumstances under which the fraud went undetected by them, were judged to be reasonable and did not call for monetary penalties.

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