Skip to main content

BoB Anti-money laundering norms may be tightened

By
Allegedly illegal foreign exchange transactions at a Bank of Baroda (BoB) branch in New Delhi are likely to prompt the central bank to tighten anti-money laundering norms. Sources at the Reserve Bank of India (RBI) say systemic implications have been ruled out.
The government-owned lender has already suspended two officials, while the Central Bureau of Investigation (CBI) is carrying out searches at many other branches of the bank.
The allegedly illegal transactions came to light after BoB noticed its Ashok Vihar branch in the national capital had unusually heavy foreign exchange transactions.
Between May 2014 and August 2015, 5,853 outward foreign remittances, amounting to Rs 3,500 crore, primarily for “advance remittances for import” were recorded. In a communication to stock exchanges, the bank said the funds were transferred through 38 current accounts to foreign parties, numbering 400, primarily based in Hong Kong, and one in the UAE.
BoB: Anti-money laundering norms may be tightened “The branch did not adhere to FEMA (Foreign Exchange Management Act) guidelines,” the bank said, adding the matter came to its notice in mid-July, after which it ordered an internal investigation. The bank had mailed cash transaction reports of 33 accounts to the Financial Intelligence Unit (FIU). Subsequently, the matter was reported to the central bank.
“Of the total amount involved, only 10 per cent has been by way of cash deposits with our branches’ the rest was received by real time gross settlement (RTGS)/national electronic fund transfer (NEFT) from banks numbering about 30,” BoB said.
While the central bank has ruled out systemic implications and said the incident is a one-off, it is likely to quiz several banks from which money was transferred. A BoB official said the funds were transferred from public sector, private and foreign banks.
RBI sources say the incident might prompt the banking regulator to tighten anti-money laundering norms.
The central bank has voiced concern over adherence to banking guidelines. RBI has a zero-tolerance policy on violations of money-laundering or know-your-customer (KYC) norms.
“A similar problem has also been observed in meeting the KYC/AML (anti-money laundering) norms. Not only is there a general lack of sensitivity about KYC/AML compliance needs, the adherence to norms at the field level is often sidestepped on account of a lack of skill set, time or performance pressure,” RBI Deputy Governor S S Mundra had said at an event earlier this month. “My sense is a centralised, technology-supported surveillance system will perhaps serve better for ensuring compliance to KYC/AML norms.”
BoB has clarified the alleged violations haven’t led to any financial loss to the bank. On Monday, however, the BoB stock fell 5.5 per cent to close at Rs 176.8 on the BSE, against the Sensex’s 0.65 per cent fall.
Business Standard, New Delhi, 13th Oct. 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more