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RBI Fines 22 Banks for Laundering Money

The Reserve Bank of India has forced penalties on State Bank of India, Punjab National Bank and 20 other lenders for defying necessities on customer recognition, in possibly the single largest penalization of the industry. The banking controller found non-adherence to norms at these banks in an inspection of their books of accounts and internal control and observance systems in April 2013. The money laundering charges staged by online portal, firstly against Axis Bank, HDFC Bank and ICICI Bank and extended to many later had encouraged the central bank to look into practices at banks. "After considering the specifics of each case and individual bank's respond, personal submissions, information submitted and documents provided, the Reserve Bank came to the conclusion that some of the breaches were validated and warranted obligation of monetary penalty," it said in a statement issued on Monday. Based on the result, RBI issued show-cause notices to these banks before striking penalties ranging from Rs 0.50 crore to Rs 3 crore. RBI's investigation did not disclose any prima facie proof of money laundering. "However, any definite implication in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies," it said. The central bank originates flaws in banks' customer identification method, KYC practice for walk-in customers and sale of third party products such as insurance and mutual funds. There were lapses in scrutinizing of transactions in inactive accounts and in following instructions on introduce of gold on consignment basis. A dozen public sector and ten private banks were at the getting end of the regulator's bond. Seven banks including Bank of Baroda, Bank of India and Federal Bank were fined Rs 3 crore each one while Indian Overseas Bank faced the maximum fine of Rs 3.002 crore. Foreign lender Deutsche Bank was fined Rs 1 crore while Ratnakar Bank faced the lowest penalties of Rs 0.50 crore. RBI had previously imposed an Rs 10.5 crore fine on Axis Bank, HDFC Bank and ICICI Bank, taken jointly. The central bank let off seven other lenders, including BNP Paribas, Citibank and Standard Chartered Bank, with just a warning as it found their details agreeable.

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