Category Archives: Banking


RBI Fines Top Banks For Failing KYC Norms

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If you haven’t complied with KYC requirements attached to your bank account, your bank may have just suffered the consequences. In a serious move, the Reserve Bank of India (RBI) has cracked the whip on some of the top banks of the country for failing the Know Your Customer (KYC) norms issued under Foreign Exchange Management Act (FEMA).

Both, private and public banks were not spared the monetary fine and were officially penalised by India’s apex banking authority. This is the list of banks involved and the amount being charged:

  • Bank of Baroda – 5 crores
  • Punjab National Bank – 3 crores
  • Syndicate Bank – 3 crores
  • UCO Bank – 2 crores
  • HDFC Bank – 2 crores
  • Allahabad Bank – 2 crores
  • Canara Bank – 2 crores
  • IndusInd Bank – 2 crores
  • SBBJ – 2 crores
  • Bank of India – 1 crore
  • Corporation Bank – 1 crore
  • RBL Bank – 1 crore
  • SBM – 1 crore

A number of banks also received a warning from RBI, though they weren’t charged a fine for failing norms. RBI said they were “advised to put in place appropriate measures and review them from time to time to ensure strict compliance with KYC requirements and FEMA provisions on an ongoing basis”.

RBI further added: “In respect of eight other banks…based on written and oral submissions, it was decided to advise them to put in place appropriate measures and review the same from time to time to ensure strict adherence to KYC/AML requirements as well as FEMA provisions on an ongoing basis”.

The banks under this scrutiny include the following:

  • Axis Bank
  • Federal Bank
  • ICICI Bank
  • Kotak Mahindra Bank
  • OBC
  • Standard Chartered Bank
  • SBI
  • Union Bank of India

The crackdown comes on the brink of RBI discovering discrepancies in following procedures to open accounts, especially rules and regulations set down by FEMA. The guidelines on which the apex bank put up an inquiry on these 21 banks, and why they decided to fine some while issuing a show cause notice for the others, is based on the degree to which each bank failed to follow procedures, including management oversight, violation of certain regulations and various internal controlling systems.


Indian rupee achieves all-time low against the US dollar

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On Wednesday, June 26, 2013, the Indian rupee has hit an all-time low against the US dollar and it is now at 60 per dollar. By Wednesday afternoon, the Indian rupee was trading at 60.62 to the dollar, compared to the 59.66 in late Asian trade on Tuesday, June 25, 2013.

After the news of the Indian rupee falling below 60 spread, even the stocks tumbled down. Kishor Ostwal, chairman and managing director of Mumbai-based brokerage CNI Research Ltd., said, “The wild swing in currency is adding to weakness in markets, which is already seeing selling by foreign investors”. According to currency dealers, the decline in the Indian rupee was partly due to big demand for dollars from oil companies.

The oil companies usually pay their import bills at the end of the month. Dealers also said that foreign investors have also been selling Indian debt. Since the beginning of May 2013, the Indian rupee has weakened by more than 11%, as global investors have rushed into the assets dominated by the dollar.

This has happened on expectations that the US Federal Reserve will soon roll back a huge stimulus program, which has injected billions of dollars into the global financial system.


Banks advised to assign reasons to reject educational loans

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The Indian Parliament on November 22, 2012, informed that all banks have been asked to assign reasons for rejecting educational loan applications. The banks have been advised that the rejection of loans has to be done with the approval of the controlling authority.

Finance Minister P Chidambaram said, “Banks have been advised that rejection of education loan applications has to be with the approval of controlling authority of the branch concerned and the reason for rejection should be communicated to the applicants in writing”. Chidambaram added that the Indian Banks’ Association has advised all banks to give wide publicity to their grievance redressal mechanism on educational loans and to make effective the use of the  mechanism.

The minister also said that any complaints regarding educational loans,  as and when they are received,  are to be taken up for  corrective action with the banks in concern. As of March 2009, the banks had an outstanding loan of Rs. 27,000 crores on education loans, Rs. 35,850 crores as of March 2010 and Rs. 41, 340 crores as of March 2011.

The data was revealed as per the Reserve Bank Of India’s records. The RBI had ordered not to reject any educational loan even if the address of the borrower does not fall under their service area.


Rs. 200 crore loan for Kingfisher rejected by lenders

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The loan request of Rs. 200 crore from Kingfisher has been rejected by the SBI-led lenders. On September 27, 2012 the lenders consortium had asked the SBI capitals to plan a new revival plan for the financially struggling airline in the upcoming 2 to 3 weeks.

A presentation was made by Vijay Mallya, the Kingfisher Chairman which was presented in a meeting with the lenders in Bangalore headquarters on September 27, 2012. This was the first meeting after the government allowed the foreign airlines to invest in the domestic carriers. The lenders said that Mallya did not offer any concrete plan as he did not commit to any equity infusion by the promoters.

An official from the public sector bank said that the lender had rejected the request from Mallya for an immediate working capital loan Rs. 200. The airline since the month of January has not been able to pay its Rs. 7,000 crore bank debt.

The officials added that the lenders have asked the SBI Capitals to make a fresh plan which will be the third one for the airline in the upcoming weeks. When asked of the banks will be open to the second CDR the sources say that it will depend on the SBI Caps proposal.


Central Bank of India slashes interest rates on loans

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Government owned Central Bank of India has announced that a reduction of up to 2 % in the interest rates across the retail loan categories. This also includes home loans, vehicle loans and other retail advances like the personal loans which have corporate and non corporate borrowers as well as pensioners and gold loans.

Earlier the other lenders like State Bank of India and Indian Overseas Bank had also announced a reduction in the interest rates. But unlike the SBI, the Central Bank of India would also be providing the benefit to the already existing borrowers as well.

The revised rates on the vehicle loans will be applicable to all tenures of up to 84 months. The latest rate revision will come in to effect from September 1, 2012. The new scheme has been announced as a part of its festive scheme.

The banks has also waived off the processing charges on the retail loan segments during the upcoming festive season. Even the Union Bank Of India had also lowered its interest rates on the auto loans by 1.55 to 2.55 %. Moreover it has already decided to do away with the processing fees on the home and auto loans sanctioned between August 15, 2012 and January 26, 2013.