Bank Officials Flouting Norms to Face Serious Action: RBI

Following the strict action taken by the Government, IT (Income Tax) department and Enforcement Directorate (ED) post demonetisation, RBI has now stepped in to take strict action against bank flouting norms and regulations. It has now come to light that RBI has imposed a fine on five international banks for violating FEMA (Foreign Exchange Management Act), 1999. As per reports action has been taken against these banks for their failure to report on requirements of FEMA. This action has been initiated by the RBI after thorough investigations.

Monetary penalties have been imposed on Bank of America, Bank of Tokyo Mitsubishi, Deutsche Bank, The Royal Bank of Scotland and Standard Chartered Bank. It is well worth mentioning that this is a first of its kind action by RBI. Bank of America, Bank of Tokyo Mitsubishi, The Royal Bank of Scotland and Standard Chartered Bank have been penalized a sum of rupees 10,000 each while Deutsche Bank has been asked to pay rupees 20,000.

RBI had issued show cause notices to these banks. The banks had made both oral as well as written submissions to the show cause notice by the apex bank. A statement issued by RBI says “After considering the facts of the cases and the banks’ replies in the matter, Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of penalty”

Media reports suggests these banks have been involved in converting black money into white as well as converting them into foreign currencies and sending them abroad. RBI is also monitoring those accounts through which such transfers have taken place. This is definitely ‘Acche Din’ for the public and not so ‘Acche Din’ for black money holders and money launderers. FEMA, the successor of FERA, came into force on 1st June 2000. The act regulates foreign exchange as well as inflow and outflow of currencies.

Following PM Modi’s initiative to curb black money, RBI has taken the unprecedented step of monetarily penalising international banks for flouting RBI’s instructions. Such strict action will not only send a strong message about the seriousness of this Government to curb and punish those involved in black money transactions but also deter others from indulging in such fraudulent acts.

Latha Iyer