RBI is contemplating hike in penalty to be imposed on Bank for their involvement in money laundering as exposed by Cobrapost through their sting operation. Penalty of rupee one crore is nothing but a drop in ocean. After all, the fine will be debited to expenditure account of the bank and not recovered from the CMD or ED or GM or DGM who inculcated bad culture for achievement of target and who used to fire branch head and officials for not achieving target and who failed to enforced discipline among officers.
Whatsoever may be the value of penalty, the burden of penalty imposed on banks by RBI will ultimately fall on customers,taxpayer and depositors money. The individuals who committed mistake and who have been consistently committing mistake for years together and who will continue to do so in future too will sleep as comfortably as he or she used to be before Cobrapost sting operation exposure.
Officers who were exposed on TV are made scapegoat but the head of the bank who inculcated bad culture for achieving the target will instead of punishment be promoted by government.
Pawan Bansal ex railway minister who promoted and propagated bribe culture will be made Governor in some state or the other and his PA or other junior level officials who simply followed verbal orders of the ministers will be made scapegoat for promotion scam exposed by CBI. This is Indian culture.
Officers of bank who were exposed on TV by Cobrapost already suspended but ministers submit only resignation even after his man caught red handed taking bribe and giving bribe and that too after mass movement on road and in Parliament.
As a matter of fact neither RBI nor Ministry of Finance has will to punish bankers because all acts of omission and commission are in nexus with them only. Moreover when officials and ministers are involved in various scams , they do not have moral to punish bankers , at least top ranked bankers who have been appointed as bank Head through unfair ways and means only.
Cobrapost fallout: Govt, RBI looking at hiking penalty amount-- Economic times
MUMBAI: In the wake of alleged violation of KYC norms by a large number of banks, the government and RBI are looking at the possibility of hiking the penalty which can be imposed on the erring banks.
"The maximum penalty under the law is Rs 1 crore now and that is very less. There is active discussion now on increasing limit of penalty. So that is something which is under consideration," Banking Secretary Rajiv Takru told reporters here today at the sidelines of LIC Board meeting.
"As a matter of fact, this (hike of penalty) was discussed at the RBI board and a point was made that the penalty amount is probably less," he added.
The regulator has sent show-cause notices to the erring banks and is awaiting their replies to take appropriate corrective measures, Takru said.
However, he did not specify how much should be the quantum of increase.
Referring to the Cobrapost expose and the punitive actions being planned on erring banks, Takru said the RBI had already issued show-cause notices to the banks after which it would take action.
"The RBI has clarified that they have issued show cause notices to the banks concerned. They are probably waiting for the reply now. This is the final stage before any action is taken," Takru said.
In a reply to a question on any mismatch between the findings of the report and statements from RBI top management, he said till the decision is taken, nobody should take any public statement as the final word on the issue.
"Not sure, what has come out in the media, the RBI report is anyway being acted upon...The RBI can only take a final stand after the show-cause notice is replied to. So, I don't think you should take any statements by anyone as finality in this case," Takru said.
Newsportal Cobrapost in its sting operations has alleged that major private and public sector banks have been flouting money laundering as well as KYC norms.
On the issue of insurance products being taken as a route to convert black money, Takru said the issue is being addressed.
"We are checking out all transactions where large premia have been paid. In cases where multiple policies have been taken by the same PAN numbers, such numbers have been isolated and they have been looked at very carefully.
"The minute, we zero in on the people who could have converted black money through this route, then the law will take its own course. We are aware of the problem and it is being addressed," Takru added.
On his discussions with bankers yesterday, he said the issues relating to direct benefits transfer (DBT) scheme along with stalled projects were part of the agenda.
It may be recalled that Takru, among other things, discussed the revival possibility of the stalled 400-MW hydel project of Shree Maheshwar Hydel Power Corporation promoted by the S Kumar Group that has been stuck since 1998.
The hydel project, on the river Narmada in Madhya Pradesh, is promoted by MW Corporation, which has emerged out of the S Kumar Group.
Banks have a Rs 2,000-crore exposure to the company, of which SBI has Rs 200 crore, while rest is with others like IDBI and PFC. Most of these lenders have classified their loans to the project as non-performing assets.