The penalties imposed by RBI are the highest so far and come in the wake of finance secretary Rajiv Takru called for levying fines running into hundreds of crores. In the past, RBI had imposed penalties of up to Rs 5 lakh per offence. Since then, the level of penalties permitted has been increased following an amendment to the Banking Regulation Act.
Although RBI has not explained the level of penalties, it has cited multiple offences indicating that it has drawn up the final amount after drawing up a list of offences.
The penalties are a fallout of an RBI investigation after a sting operation exposed violations in these three banks. Besides these three banks, RBI also conducted a scrutiny at the corporate offices of 36 other banks during April and May 2013. The process of follow-up action in respect of these banks is at different stages of completion and more penalties are likely.
In a statement issued on Monday, RBI said that it has discovered that banks have not followed safeguards in accepting cheques issued by cooperative banks. In some cases, banks have not followed the know your customer (KYC) norms in respect of risk categorization and periodic review of risk profiling of account holders.
In some cases the banks had not obtained permanent account number (PAN) card details from clients. In the case of non-resident accounts, there have been instances where the bank has not classified the accounts as NRO or has failed to designate the account as NRO.
In April this year, a web portal had sent its undercover reporters to banks posing as persons connected to politicians and seeking to launder large amounts of black money. Although no transactions were conducted, the clandestinely shot videos revealed that bank officials were willing to be accomplices in the process of money laundering.