HDFC Bank, 2 PSBs fined for regulatory lapses

Reserve Bank carried out the investigation and noted the deficiencies which were reflective of weaknesses and failures in internal control mechanisms

The RBI has imposed penalties of Rs 5 crore (Rs 50 million) and Rs 3 crore (Rs 30 million) on PSU lenders Bank of Baroda and Punjab National Bank, respectively and also fined private sector HDFC Bank Rs 2 crore (Rs 20 million) for lapses in adhering to anti-money laundering guidelines.

"The RBI has imposed a penalty of Rs 50 million on Bank of Baroda (BoB)... Pursuant to the internal audit of the Bank of Baroda, the Reserve Bank of India and investigative agencies in October 2015 were advised by the Bank of certain irregularities observed," BoB said in a BSE filing.

A Rs 6,100-crore (Rs 61 billion) scam was unearthed at Bank of Baroda's (BoB) Ashok Vihar, Delhi branch in October 2015.

The public sector lender further said the Reserve Bank carried out the investigation and noted the deficiencies which were reflective of weaknesses and failures in internal control mechanisms in respect of certain "anti-money laundering (AML) provisions such as monitoring of transactions, timely reporting to Financial Intelligence Unit (FIU) and assigning of Unique Customer Identification Code (UCIC) to customers".

BoB said it has implemented a comprehensive corrective action plan to strengthen internal control and ensure that such incidents do not recur.

Punjab National Bank (PNB) also informed the BSE that the RBI has imposed an aggregate penalty of Rs 3 crore on it.

"Though the amount of penalty is not material to the size of the Bank, reporting is done in terms of SEBI (LODR) Regulations 2015," PNB said.

The bank said it has taken necessary preventive measures/comprehensive to avoid recurrence of lapses.

Private sector HDFC Bank, in its filing, said that further to the media reports in October 2015 about irregularities in advance import remittances in various banks, the RBI had conducted a scrutiny of the transactions carried out by HDFC bank.

The country's second largest private sector lender said the RBI issued a show-cause notice to which the bank submitted its detailed response.

"After considering the bank's submissions, the RBI has imposed a penalty of Rs 20 million on the bank on account of pendency in receipt of bills of entry relating to advance import remittances made and lapses in adhering to KYC/AML guidelines in this respect," it said.

Photograph: Reuters