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The Reserve Bank of India, in exercise of powers
vested in it under the provisions of Section 47 A (1)(b) of the Banking Regulation
Act, 1949, has imposed monetary penalties on three more scheduled commercial
banks for violation of its regulations on Know Your Customer (KYC) norms, for
breach of prudent banking practices and for not adhering to its directives/
guidelines relating to loans against shares/ IPO.
The Reserve Bank had issued show cause notices
to these banks. In response to the show cause notices, banks had submitted their
written responses and the Chief Executive Officers had also sought personal
hearing with the Reserve Bank, which was granted.
On careful examination of banks' submissions,
the Reserve Bank has come to a conclusion that the aforesaid violations were
substantiated and accordingly, the following monetary penalties are imposed.
a) HDFC
Bank Ltd. – Penalty of Rs. 25 lakh
b) ING
Vysya Bank Ltd. – Penalty of Rs. 10 lakh
c) IDBI
Ltd. – Penalty of Rs. 5 lakh
The quantum of the penalty has been decided
on basis of the magnitude and enormity of the contravention/ violation observed
in each bank. The details of the irregularities committed by each bank have
been placed on the RBI website.
It may be recalled that on January
23, 2006 the Reserve Bank had penalised seven
scheduled commercial banks including HDFC Bank for violation of RBI regulations
on Know Your Customer (KYC) norms, for breach of prudent banking practices and
facilitating misuse of IPO finance to ineligible borrowers.
In October 2004, as part of measures to improve
the transparency of banks, the Reserve Bank had announced its decision to disclose
in public domain information on penalties imposed on banks after due process
of advising a bank and seeking its explanation so as to give reasonable opportunity
to the bank for being heard.
P.V.Sadanandan
Manager
Press Release : 2005-2006/1089
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