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RBI penalises 22 banks for flouting KYC regulations

New Delhi, Jul 15, 2013, DHNS
22 banks fined for violating KYC/anti-money laundering norms. File Reuters Image

The Reserve Bank of India (RBI) on Monday slapped fines on 22 private and public sector banks including State Bank of India, Punjab National Bank and Yes Bank for violating KYC/anti-money laundering (ALM) norms consequent to its investigation.

Further, RBI warned seven more banks including Citibank and Stanchart by issuing cautionary letters.

In all, the apex bank levied fines up to Rs 49.5 crore. “After considering the facts of each case...Reserve Bank came to conclusion that some of the violations were substantiated and warranted imposition of monetary penalty...” said RBI in a statement.


A penalty of Rs 3 crore each has been imposed on State Bank of India (SBI), Bank of India, Canara Bank, Bank of Baroda, Central Bank of India, Indian Overseas Bank and Federal Bank.

United Bank of India, Lakshmi Vilas Bank, Punjab National Bank, Jammu & Kashmir Bank and Andhra Bank were slapped a penalty of Rs 2.5 crore each.

A penalty of Rs 2 crore each was imposed on Yes Bank, Vijaya Bank, Oriental Bank of Commerce and Dhanlaxmi Bank. Other banks penalised include Deutsche Bank, Development Credit Bank,  ING Vysya Bank, Kotak Mahindra Bank and Ratnakar Bank.
Following probe into charges levelled by an online portal Cobrapost, RBI has earlier imposed fines totalling Rs 10.5 crore on three private lenders - Axis Bank, HDFC Bank and ICICI Bank.

Although the investigation did not reveal any prima facie evidence of money laundering, RBI said that “any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies.”

It may be noted that the minimum amount of fine imposed by RBI was at Rs 50 lakh on Ratnakar Bank while the Indian Overseas Bank will have the maximum amount of Rs 3.002 crore.  And Deutsche Bank -- who was levied a fine of Rs 1 crore -- is the only foreign lender to have appeared in the list of 22 banks.

Apart from Citibank and Standard Chartered Bank, RBI  issued cautionary letters to Barclays Bank, BNP Paribas, Royal Bank of Scotland, Bank of Tokyo Mitsubishi and State Bank of Patiala.  In this context, RBI maintained: “..... where scrutinies have been conducted and banks’ explanation..... were found to be satisfactory or no violation of serious nature has been established. It has, therefore, been decided not to impose any monetary penalty but to issue only suitable cautionary letters."

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