The RBI, after investigation into the matter, on Monday, imposed monetary penalty of Rs.5 crore on Axis Bank, Rs.4.5 crore on HDFC Bank and Rs.1 crore on ICICI Bank for violating its instructions on KYC norms.
The RBI had carried out a scrutiny of books of accounts, internal control, compliance systems, and processes of these three banks at their corporate offices and some branches during March and April 2013 to investigate into the allegations of contravention of KYC/AML guidelines against them.
The scrutiny revealed violation of certain regulations and instructions issued by the RBI which includes non-observance of certain safeguards in respect of arrangement of “at par” payment of cheques drawn by co-operative banks; non-adherence to certain aspects of KYC norms and anti-money laundering (AML) guidelines such as risk categorisation and periodical review of risk profiling of account holders; and non-adherence of KYC for walk-in customers, including for sale of third-party products, omission in filing of cash transaction reports in respect of some cash transactions, and sale of gold coins for cash beyond Rs.50,000, the RBI said.
The banks had also violated RBI’s norms by not-obtaining of permanent account number card details or form 60/61 as required, non-verification of source of funds credited to a few non-resident ordinary accounts, and failure to re-designate a few accounts as NRO accounts though required, non-submission of proper information called for by the RBI, it added.
“The investigation did not reveal any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies,” the RBI said in a statement.
Based on the findings of the scrutiny, the RBI issued a show-cause notice to each of these banks, in response to which the individual banks submitted written replies. After considering the facts of each case and individual bank’s reply, as also personal submissions, information submitted and documents furnished, the RBI came to the conclusion that some of the violations were substantiated.