New Delhi, April 30: The Reserve Bank imposed Rs 1.5 crore penalty each on three banks-- Dena Bank, Oriental Bank of Commerce and Bank of Maharashtra-- for violation of Know Your Customer/Anti Money Laundering norms.
In aggregate three banks have to pay Rs 4.5 crore fine for failing to comply with the guidelines.
Besides, the RBI has cautioned eight other banks-- Central Bank of India, Bank of India, Punjab and Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank, Union Bank of India and Vijaya Bank-- to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.
"This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank and its customers," it said.
The penal action was based on the basis of a complaint received by the RBI from a private organisation.
A scrutiny of "fixed accounts" opened in its name in Mumbai-based branches of certain public sector banks was undertaken in July 2014.
"With more complaints and involvement of other banks coming to light, a wider thematic review was conducted and in all 12 branches of 11 public sector banks were covered," it said.
"The scrutiny or thematic review looked into the modus operandi of the alleged frauds involving accounts of certain organisations in these banks, deficiencies or irregularities while opening Fixed Deposits (FDs) and extending Overdraft (OD) facility there against," it said.
Besides, it said, the effectiveness of systems and processes in place pertaining to implementation of know your customer (KYC) norms or anti-money laundering (AML) standards in respect of these accounts was also looked into.
The findings revealed violation of certain regulatory guidelines issued by the RBI as also other "disquieting" actions on the part of the banks including non-adherence to the RBI's instructions regarding funds received through Real Time Gross Settlement System (RTGS) and opening of FD accounts and granting overdrafts there against without due diligence
Besides, RBI also found involvement of middlemen or intermediaries in opening of the accounts as also subsequent operations in those accounts.
Based on the findings, the RBI issued a show cause notice to 11 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 of serious nature were substantiated and warranted imposition of monetary penalty on three banks, namely, BoM, Dena Bank and OBC," it said.
"Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and its impact," it said.