BoB was fined for the Rs 6,100 cr scam & HDFC for lapses in KYC adherence
New Delhi : The Reserve Bank of India (RBI) has imposed a penalty of Rs 5 crore on Bank of Baroda (BoB) after it found irregularities in the Rs 6,100-crore scam that was unearthed last year. RBI has also imposed a fien of Rs 2 crore on HDFC Bank for lapses in adhering to Know Your Customer (KYC) and anti-money laundering (AML) norms.
“The Reserve Bank of India has imposed a penalty of Rs 50 million on Bank of Baroda… Pursuant to the internal audit of the Bank of Baroda, the Reserve Bank of India and investigative agencies in October 2015 were advised by the Bank of certain irregularities observed,” Bank of Baroda said in a BSE filing. It further said: “The RBI carried out the investigation and noted the deficiencies which were reflective of weaknesses and failures in internal control mechanisms in respect of certain AML provisions such as monitoring of transactions, timely reporting to FIU, and assigning of UCIC to customers”. Bank of Baroda said it has implemented a comprehensive corrective action plan, to strengthen internal controls and to ensure that such incidents do not recur. Various irregularities by bank such as non-submission and inordinate delays in filing of Suspicious Transaction Reports (STRs), besides opening of accounts by several entities without fulfilling KYC norms, were noticed by Reserve Bank of India. The observation came as part of inspection done by the central bank after last year’s Bank of Baroda case in which Rs 6,100-crore import remittances were effected by its Ashok Vihar branch. Both CBI and the Enforcement Directorate are probing the huge remittances to Hong Kong from the bank. The amount was allegedly transferred in the garb of payments for imports that never took place, investigators say. After the BoB case, RBI wrote a confidential letter to chairmen and chief executives of all commercial banks asking them to review existing policies and effect necessary improvements where warranted to avoid recurrence of such irregularities. Further to the media reports in October 2015 about irregularities in advance import remittances in various banks, the RBI had conducted a scrutiny of the transactions carried out by HDFC bank, the country’s second largest private sector lender said in a regulatory filing. The RBI issued a show-cause notice to which the Bank submitted its detailed response, reports PTI. “After considering the bank’s submissions, the RBI has imposed a penalty of Rs 20 million on the bank on account of pendency in receipt of bills of entry relating to advance import remittances made and lapses in adhering to KYC/AML guidelines in this respect,” it said. HDFC Bank further said it has implemented a “comprehensive corrective action plan” to strengthen its internal control mechanisms “so as to ensure that such incidents do not recur”.