RBI slaps Rs 4.5 crore penalty on Dena Bank, OBC, Bank of
Maharashtra

Three public sector banks -- Bank of Maharashtra, Dena Bank and Oriental Bank of Commerce --have been imposed with a monetary penalty of Rs 1.5 crore each by the Reserve Bank of India (RBI) for violation of know your customer (KYC) and anti money laundering
(AML) norms.
Dna was the first to
report on the fixed deposit (FD) scam involving Dena Bank and Oriental Bank of
Commerce on August 20, 2014, where branch managers mobilised FDs involving
middlemen. The dna report had quoted a finance ministry document which said
Oriental Bank scam involved FDs to the tune of Rs 256.49 crore from seven
corporates and the Dena Bank FD scam involved a FD of Rs 180 crore.
RBI scrutiny trailed the modus operandi of the alleged frauds involving accounts
of certain organisations in these banks, deficiencies and irregularities while
opening Fixed Deposits (FD) and extending Overdraft (OD) facility. The scrutiny
was based on the complaint received by the RBI from a private organisation.
An investigation into the fixed deposits opened in its name in Mumbai-based
branches of certain public sector banks was undertaken in July 2014.
Eight other banks -- Central Bank of India, Bank of India, Punjab and Sind Bank,
Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank, Union Bank of
India and Vijaya Bank -- have been cautioned to put in place appropriate
measures and review them from time to time to ensure strict compliance of KYC
requirements in future.
The central bank did not penalise these banks as they offered satisfactory
explanations which the regulator found reasonable. RBI said in a release, "This
action is 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."
Banks were violating RBI's instructions regarding opening of FD accounts and
granting overdrafts without due diligence or process. The scrutiny also found
weaknesses in the internal control systems, management oversight, use of internal
accounts for parking customer funds and involvement of middlemen/
intermediaries in opening of accounts as also subsequent operations in those
accounts.
After considering the facts of each case and individual bank's reply, as also,
personal submissions, information submitted and documents furnished, the
Reserve Bank came to the conclusion that some of the violations of serious
nature were substantiated and warranted imposition of monetary penalty.