RBI imposes total Rs 7 crore penalty on Bank of Baroda, HDFC Bank

The Reserve Bank of India (RBI) on Monday has imposed penalties of total Rs 7 crore on Bank of Baroda and HDFC Bank on the back of irregularities it found in both banks. The central bank has imposed penalities on the two banks under Section 35 (1A) of the Banking Regulation Act, 1949. 

"...The Reserve Bank of India (RBI) has imposed a penalty of Rs 5 crore (Rs 50 million) on Bank of Baroda," cited the state-owned Bank of Baroda in a filing to the BSE on Monday. 

"Pursuant to the internal audit of the Bank of Baroda, the Reserve Bank of India (RBI) and investigative agencies in October 2015 were advised by the Bank of certain irregularities observed," it said in a statement. 

Bank of Baroda further said, "The RBI 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 FIU, and assigning of UCIC to customers. The bank fully cooperated with the RBI during the process, leading to the conclusion of its findings."  

The bank has implemented a comprehensive corrective action plan, to strengthen internal controls and to ensure that such incidents do not recur, it added. 

The stock of Bank of Baroda on Monday closed up 3.21% or Rs 4.85 at Rs 155.75 on the BSE. 

In a separate filing to the BSE on Monday, HDFC Bank said, " Further to the media reports in October 2015 about irregularities in advance import remittances in various banks, the Reserve Bank of India (RBI) had conducted a scrutiny of the transactions carried out by the Bank under Section 35 (1A) of the Banking Regulation Act, 1949." 

"After considering the bank's submissions, the RBI has imposed penalty of Rs 2 crore (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 Know Your Customer/Anti-Money Laundering guidelines in this respect," cited the private sector lender in a statement.

The stock of HDFC Bank on Monday closed up 1.23% or Rs 15.10 at Rs 1,246.55 on the BSE.

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