RBI imposes $4.03m penalty on 13 banks for KYC and FEMA violations
Reserve Bank of India (RBI) has imposed a Rs 27-crore ($4.03m) penalty on 13 banks for violation of "know your customer" (KYC) and FEMA guidelines. The scrutiny of the banks, including Bank of Baroda, Punjab National Bank, and HDFC Bank, allegedly exposed a weakness to their adherence to customer identification and risk categorisation guidelines. Eight other banks, including Axis Bank, Federal Bank and Union Bank of India, have been advised to continually ensure their strict compliance with KYC requirements and FEMA provisions to avoid regulatory penalties in the future.  

The Reserve Bank of India (RBI) has imposed Rs 27-crore penalty on 13 public and private sector banks and asked eight others including SBI and ICICI Bank to ensure strict compliance with know your customer (KYC) and FEMA guidelines.

The RBI had undertaken a scrutiny on advance import remittances of around Rs 6,100 crore in 21 banks in October and November 2015 on the basis of inputs received from a public sector bank. The RBI said it has imposed monetary penalty on 13 banks for violation of regulatory directions and guidelines, among other things, on KYC and FEMA norms. These banks are: Bank of Baroda (Rs 5 crore), Punjab National Bank (Rs 3 crore), Syndicate Bank (Rs 3 crore), UCO Bank (Rs 2 crore), HDFC Bank (Rs 2 crore), Allahabad Bank (Rs 2 crore), Canara Bank (Rs 2 crore), IndusInd Bank (Rs 2crore), SBBJ (Rs 2 crore), Bank of India (Rs 1 crore), Corporation Bank (Rs 1 crore), RBL Bank (Rs 1 crore) and SBM (Rs 1 crore).

The Indian Express had reported about the penalty on BoB, PNB and HDFC Bank on Tuesday. The RBI further said that eight other banks — Axis Bank, Federal Bank, ICICI Bank, Kotak Mahindra Bank, OBC, Standard Chartered Bank, SBI and Union Bank of India — have been “advised to put in place appropriate measures and review them from time to time to ensure strict compliance with KYC requirements and FEMA provisions on an ongoing basis”. The central bank’s action is in connection with the Rs 6,100-crore foreign exchange fraud exposed last year. What has complicated matters further was the revelation that while remittances were sent to Hong Kong and Dubai via banks, actual exports were sent to Afghanistan.