Reserve Bank Of India[RBI], has slapped Rs 1.5 crore penalty each on 3 public sector banks like Dena Bank, Oriental Bank Of Commerce[OBE] and Bank Of Maharashtra [BOM] .The main purpose of the penalty was that these banks violated rules for Know Your Customer[KYC] and Anti Money Laundering [AML].
To ensure strict compliance with rules, RBI has also asked other eight public sector banks like Bank Of India, Punjab National Bank,Central Bank Of India, UCO bank, Vijaya Bank, Punjab And Sindh Bank, State Bank Of Bikaner and Jaipur and Union Bank Of India.
- RBI began scrutiny of fixed accounts opened in Mumbai based branches in July 2014 because of a complaint by private organisation.
- When more complaints came in, it expanded the ambit of the review to cover 12 branches of 11 public sector banks.
- Violation of regulatory norms was clearly seen from the findings collected.
- Timely remedial action was not taken by the three banks and in turn aggravated the seriousness of the violations and its consequences.
- The modus operandi or procedure of the frauds involving the accounts of certain organisations in the bank was covered by the earlier review.
- The investigation dealth with the deficiencies or irregularities in fixed deposits opening and extendingoverdraft facilities.
- Implementation of KYC norms for these accounts was also examined.
- Banks failed to adhere to KYC rules for customer identification,acceptance and monitoring transcations.
- There are weaknesses in the internal control systems,management oversight, and use of internal accounts for parking funds of the customers.
ABOUT PUBLIC SECTOR BANKS [PSB]
- Public sector banks are those where majority stake[50%] is held by government.
- There are totaly 27 PSB’s in India.
- Nationalisation of banks was done mainly to break the ownership control of banks by few business families, to prevent the concentration of wealth and power.
- Other purposes of nationalisation is to mobilise savings from all the masses from all over the country and to cater the requirements of private sectors.