RBI slaps Rs5-cr penalty on Bank of Baroda for fraudulent forex transactions
25 July 2016
Reserve Bank of India (RBI) has imposed a Rs5-crore penalty on Bank of Baroda in the Rs6,100 crore forex related irregular transactions that came to light in October last year.
"Pursuant to the internal audit of Bank of Baroda, the Reserve Bank of India and investigative agencies in October 2015 were advised by the bank of certain irregularities observed," the bank informed the exchanges.
"The Reserve Bank of India has imposed a penalty of INR50 million on Bank of Baroda... Pursuant to the internal audit of the Bank of Baroda, the Reserve Bank of India and investigative agencies in October 2015 were advised by the bank of certain irregularities observed," Bank of Baroda said in a BSE filing.
"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 AML provisions such as monitoring of transactions, timely reporting to FIU, and assigning of UCIC (Unique Customer Identification Code) to customers," it further said.
The amount was allegedly transferred from its Ashok Vihar branch in New Delhi in the garb of payments made for various fictitious imports, investigators suspect.
RBI investigation has noted deficiencies and failures in internal control mechanisms in respect of certain anti-money laundering provisions by the state-run lender.
RBI noticed various irregularities such as non-submission and inordinate delays in filing of Suspicious Transaction Reports (STRs), besides opening of accounts by several entities without fulfilling KYC norms.
Bank of Baroda said it has since implemented a comprehensive corrective action plan, to strengthen internal controls and to ensure that such incidents do not recur.
The Central Bureau of Investigation (CBI) and the Enforcement Directorate are probing the huge remittances to Hong Kong from the bank.
RBI had circulated a confidential letter to chairmen and chief executives of all commercial banks asking them to review existing policies and effect necessary improvements were warranted to avoid recurrence of such irregularities.