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Thursday, December 18, 2014

Violation of KYC norms: RBI slaps Rs 50 lakh penalty on ICICI Bank, Rs 25 lakh on Bank of Baroda

The Reserve Bank of India (RBI) on December 17 imposed penalties on ICICI Bank and Bank of Baroda for violating 'Know Your Customer' (KYC) as well as anti money-laundering norms (ALM). The central bank fined ICICI Bank Rs 50 lakh, BoB Rs 25 lakh, and cautioned State Bank of India, Axis Bank and State Bank of Patiala that they should review and comply with KYC norms.

In a statement, RBI said, "Failure on the part of these banks (ICICI Bank and BoB) to take timely remedial measures had aggravated the seriousness of the contraventions and their impact."

RBI reviewed the KYC and ALM processes of these banks after it received a complaint from a reputed statutory organisation in August 2013. This complaint included details of a fraud perpetrated in the five banks censured, with the connivance of certain officials of the statutory organisation.

"The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts, mainly for encashing cheques/ demand drafts/ postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks," the RBI statement read, without naming the organisation. The central bank conducted a scrutiny of these five banks in January 2014.

The scrutiny revealed "non-adherence to certain aspects of Know Your Customer or KYC norms and non-adherence to instructions on monitoring of transactions in customer accounts", RBI said. The central bank decided to impose a monetary penalty on ICICI Bank and BoB after issuing a show-cause notice and reviewing their response. State Bank of India, Axis Bank and State Bank of Patiala were not fined "as the banks' explanations regarding the circumstances which led to the fictitious accounts getting opened and operated without detection, were judged to be reasonable".

This is not the first time private sector banks like ICICI Bank and Axis Bank have been pulled up by the central bank for violation of KYC norms. In 2013, RBI had imposed a penalty of Rs 1 crore and Rs 5 crore on ICICI Bank and Axis Bank, respectively, after an expose by the website, CobraPost, in which undercover reporters sought bank staff 's assistance in legitimising black money. Those fines were also for non-adherence to KYC, antimoney laundering and filing of Cash Transaction Reports (CRTs).

Most recently, in July 2014, the central bank had imposed a combined fine of Rs 1.5 crore on 12 banks, for not conducting adequate due diligence on loans granted to Deccan Chronicle Holdings, which led to a loss of Rs 4,000 crore to the banking sector.

Source : Economic Times
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Vijaya Bank event at Pollachi

Vijaya Bank organised the Pradhan Mantri Jan Dhan Yojana programme at Pollachi. KR Shenoy, Executive Director of Vijaya Bank, distributed Rupay Cards and Pass Books to the beneficiaries. The programme was attended by over 200 beneficiaries and large number of people from nearby villages, said a Vijaya Bank statement. Shenoy explained various important features of the scheme to beneficiaries. A short film on Pradhan Mantri Jan Dhan Yojana Scheme in the local language was screened to create awareness.


Source : Thehindubusinessline
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Diluting government stake is credit positive for banks: Moody’s

The Cabinet decision to allow private capital by diluting government stake in public sector banks is credit positive for undercapitalised banks, according to Moody’s Investor Service.

“The ability to raise private capital that dilutes the government’s stake is credit positive for the undercapitalised public sector banks because government resources to recapitalise banks are limited,” Moody’s said in a statement.

On December 10, the Cabinet said that it would allow government ownership in public sector banks to fall to 52 per cent as banks raise capital to meet Basel-III requirements, which will steadily rise until 2019.

“In the 11 public sector banks we rate, the Indian Government’s stakes range from 56 per cent to 84 per cent. Public sector banks account for about 70 per cent of the Indian banking system in terms of loans, deposits and branches.

The Cabinet stopped short of allowing public sector banks to reduce their government stakes below 51 per cent, a level that would jeopardize government control of the banks,” Moody’s said.

Phased reduction


The Cabinet said a phased reduction in the government’s stakes in public sector banks to 52 per cent would help raise up to ₹1.61 lakh crore from the market.


Source : Thehindubusinessline
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IRDA slaps Rs. 31 lakh penalty on Canara HSBC Oriental Life Insurance

The Insurance Regulatory and Development Authority (IRDA) has imposed Rs. 31 lakh penalty on Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd for setting policies in favour of master policy holders under non-employee/employer groups.

``The practice of issuing claim payments in favour of Master Policy Holders (Self Help Groups in this case) but not in favour of the beneficiary of the group insurance policy has a potential of jeopardising the financial interests of the dependents of the deceased policyholder,’’ the regulator said in a circular issued here on Thursday.

The regulatory had also warned the company citing many other lapses in adhering to the norms in many cases.


Source : Thehindubusinessline
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Syndicate Bank launches new scheme for women entrepreneurs

Syndicate Bank is targeting to reach out to over 20,000 women entrpreneurs across the country through a new scheme 'SyndMahilaShakti', an initiative for women empowerment.

The bank is observing 'SyndMahilaShakthi' week currently till December 20 across the country and aims to extend loans to over 20,000 women entrepreneurs to take up various self-employment activities under micro, small and medium enterprises, a press release said.

Since December 15, the bank has sanctioned loans worth Rs. 68 crore to about 5,415 women entrepreneurs till Wednesday, officials said.

Concessional interest rates

Under the scheme, the bank is extending finance up to Rs. 5 crore per woman beneficiaries at concessional interest rates.

The rate of interest for loans up to Rs. 10 lakh is at the base rate of 10.25 per cent, while for loans exceeding Rs. 10 lakh, a concession of 0.25 per cent is being provided on applicable interest rate.

The borrower has to contribute 15 per cent margin on the loan, while the processing and documentation charges are fully waived on these loans. No collateral security and no guarantee is insisted for loans up to Rs. 10 lakh.

Available facilities

The beneficiaries can avail themselves of credit card facility without any admission fee and they can also avail themselves of various facilities such as instant global debit cards/ATM cards, SMS banking, mobile banking, Internet banking, any branch banking, SyndSuraksha insurance policy and SyndArogya health insurance cover, the statement said.

All micro enterprises will get a rebate of 0.5 per cent in rate of interest for prompt repayment to be reimbursed at the time of closing the loan account. The loans can be repaid in a maximum period of 7 to 10 years, including repayment holiday.

The bank shall be covering all eligible borrowers under Credit Guarantee Fund Trust for Micro and Small Enterprises scheme.

Eligible borrowers can also be sponsored by district industries centre, NGOs, women and child development department and self help groups, among others. The beneficiaries will be given free skill development training across the country, it said.


Source : Thehindubusinessline
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