Banks penalized for violating RBI guidelines: Pranab told the Lok Sabha

In the last three years numbers of banks both government –run and private sector have violated the Reserve bank of India (RBI) guidelines therefore the RBI has reprimand these banks.

In a written reply the finance minister Pranab Mukherjee told the Lok Sabha the violated norms include “non-adherence of know-your-customer (KYC) norms, failure of internal controls in initial public offerings, violation of foreign exchange management guidelines and non-maintenance of prescribed cash reserve ratio (CRR) and statutory liquidity ratio (SLR)”.

The banks who have been given the warning by the RBI are Bank of Baroda, ICICI Bank, State Bank of Bikaner & Jaipur, Centurion Bank of Panjab, Dena Bank, Bank of India, Deutsche Bank, Yes Bank, Vijaya Bank, ING Vysya Bank, SBI Commercial and International Ltd and ABN AMRO Bank.

KYC norms lay down the suitable meticulousness which banks and financial institutions have to follow before doing business with a client.

Banks are required to maintain a certain amount in cash or in the form of gold or approved securities are known as SLR whereas the minimum reserves banks have to keep with themselves are known as CRR.

Last year in April a notice was sent to the second largest private sector lender ICICI bank for carrying out irregular dealings in securities in Hong Kong.

The reply stated in 2007 an advisory note was issued to the bank by the RBI for allegedly violating the norms at the time of opening deposit accounts.

Mr Mukherjee also informed the house that a punitive interest of over Rs 1 crore has been imposed on ING Vysya Bank and Vijaya Bank for failure in maintaining CRR.