Reserve Bank has imposed a penalty of Rs 2 crore on HDFC Bank for lapses in adhering to Know Your Customer (KYC) and anti-money laundering (AML) norms.
The RBI has also slapped a fine of Rs 5 crore on Bank of Baroda (BoB) over Rs 6,100-crore scandal exposed last year. 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 on Monday. The RBI issued a show-cause notice to which the Bank submitted its detailed response.
“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”. The RBI has imposed a penalty of Rs 5 crore on Bank of Baroda after it found irregularities in the Rs 6,100-crore scam that was unearthed last year. “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.
The RBI, BoB said, 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. The public sector bank further 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 the RBI. Shares of HDFC Bank closed at Rs 1,246.55 apiece on BSE, up 1.23%. Bank of Baroda shares closed 3.21% up at Rs 155.75 apiece.