29 July 2016 Current Affairs: The Reserve Bank of India has come down hard on 13 banks and fined them for Rs 27 crore for violation of FEMA and lapses in know your client (KYC) rules.
The matter relates to irregularities in import remittances by several banks which came to light in October 2015. On the basis of inputs received from a public sector bank, the Reserve Bank undertook a scrutiny on advance import remittances in 21 banks in October/November 2015 .
The RBI fined Bank of Baroda for Rs 5 crore, Punjab National Bank and Syndicate Bank have been fined Rs 3 crore each. UCO Bank, HDFC Bank, Allahabad Bank, Canara Bank and IndusInd Bank have all been fined Rs 2 crore each.
While the regulator did not impose any fine on SBI, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Union Bank of India, among others, it advised these banks to ensure strict compliance of KYC (know your customer) requirements and FEMA provisions on an ongoing basis.
The regulator said its actions were 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.
RBI started an inspection of banks after Rs 6,100-crore import remittances were effected by Bank of Baroda's Ashok Vihar branch in New Delhi. This, after late last year, CBI conducted search and seizure operations across multiple bank branches of HDFC Bank and Bank of Baroda in relation to irregularities in advance import remittances in various banks.
Both CBI and the Enforcement Directorate are currently probing the huge remittances to Hong Kong from the bank. The amount was allegedly transferred in the garb of payments for imports that never took place, investigators suspect.