Violation of Banking Norms

indian BanksThe banks are:

  • Bank of Maharashtra (Rs 1.5 crore),
  • Andhra Bank (Rs 1 crore),
  • HDFC Bank (Rs 20 lakh),
  • Indian Overseas Bank (Rs 1.5 crore),
  • IDBI Bank (Rs 20 lakh),
  • Allahabad Bank (Rs 1.5 crore), and
  • Kotak Mahindra Bank (Rs 20 lakh).

The RBI has imposed penalties on 7 lenders for violation of banking norms. The monitoring of end-use of funds, restructuring of accounts, classification, and reporting of frauds and exchange of information with other banks were the grounds on which the Reserve Bank of India has imposed a penalty of Rs 1.5 crore each on Indian Overseas Bank, Bank of Maharashtra and Allahabad Bank.

Andhra Bank has been imposed a monetary penalty of Rs 1 crore for the violation on similar grounds.

The Reserve Bank of India found non-compliance with several directions on Anti-Money Laundering(AML) and Know Your Customer(KYC) standards and further imposed Rs 20 lakh fine each on Kotak Mahindra Bank, IDBI Bank, and HDFC Bank.

According to the Central Bank , these penalties have been imposed in exercise of powers vested in the Reserve Bank under the provisions of Section 46(4)(i) read with Section 47A(1)(c) of the Banking Regulation Act, 1949, taking into consideration failure of the above banks to stick to the guidelines issued by the RBI.

The Central Bank also added that the penalties are based on insufficiencies in regulatory compliance and “is not intended to pronounce” upon the rationality of any agreement or transaction entered into by the banks with their customers.

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