The Reserve Bank of India (RBI) has fined ICICI Bank and Bank of Baroda over violations of Know Your Customer (KYC) and anti money-laundering norms.
ICICI Bank was fined INR5 million ($79,219) while Bank of Baroda was slapped with a penalty of INR2.5 million.
The customer protection rules of these two banks were reviewed by RBI following a complaint by a statutory organization last August over a fraud in five banks which also included State Bank of India, State Bank of Patiala, and Axis Bank, apart from ICICI and Bank of Baroda.
RBI in a statement said that the rules violations led fraudsters to open fictitious accounts in the name of the statutory organization in the five banks to cash fake checks and postal orders for up to two years.
According to RBI, "Failure on the part of these banks (ICICI Bank and BoB) to take timely remedial measures had aggravated the seriousness of the contraventions and their impact."
RBI did not impose any penalty on the other three banks as the banks’ explanations regarding the opening and operation of the fictitious accounts were judged to be reasonable, but has cautioned them to review and adhere to KYC norms.