RBI imposes fine on bank for KYC violations. See details

RBI imposes fine on bank for KYC violations. See details

The Reserve Bank of India (RBI) said that it has imposed fine worth of ₹10 lakh on The Tiruchengode Co-operative Urban Bank, Tiruchengode, Tamil Nadu, for non-adherence or violation of directions issued under various guidelines including Know Your Customer (KYC) Guidelines, the central bank said in a statement. The penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (AACS).

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the RBI statement said. The inspection report of the bank based on its financial position as of March 31, 2020, revealed violations or non-compliance with the norms. Based on the same report, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for non-compliance, it added.

“After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.”

Earlier on Friday, the central had imposed a penalty of ₹57.50 lakh on Indian Overseas Bank for non-compliance with certain directions. The non-compliance included failing to report certain instances of frauds involving ATM card cloning or skimming within three weeks from the date of detection, among others.

Meanwhile, in another development, the capital markets regulator Sebi on Friday extended the deadline by one month to August 1 for commencing the validation of all KYC records by KYC Registration Agencies (KRAs). Earlier, such agencies were required to independently validate the KYC records of all clients from July 1. The Securities and Exchange Board of India (Sebi) has received requests from the KRAs to extend the timelines.

“After consideration, it has been decided that the validation of all KYC records (new and existing) shall commence from August 1, 2022,” Sebi said in a circular. Further, KYC records of all existing clients who have used Aadhaar as an Officially Valid Document (OVD) will be validated within 180 days from August 1. Earlier, the deadline was July 1.

The regulator, in January, notified new norms to make KRAs responsible for carrying out independent validation of the KYC records uploaded onto their system by Registered Intermediaries (RIs). Under the notified rules, such agencies will have to maintain an audit trail of the upload/modification/download with respect to KYC records of clients.

Source By: livemint