The question of the quantum of penalties to be imposed on banks which are found to have flouted KYC Norms. While Governor, RBI, says that the penalties which can be imposed as per law are "peanuts" compared to European countries and the Financial Services Sector Secretary says that the law/rules would be amended to enhance the quantum of penalties, one of the Deputy Governors says that fines are intended to name and shame the concerned banks and any increase in the quantum of penalties would be passed on to the customers and hence by inference he would not be in favour of any increase in the quantum. Many of my colleagues (especially who had retired more than a decade ago) would never have come across Governor and his Deputy voicing different opinions in public. While on the subject, it is doubtful whether any bank in the present milieu would at all be "shamed" when it is named !! If the RBI means business, it has to insist on a senior official of the concerned bank being removed from the bank.Of course, it goes with out saying that this has to be done only after the bank has been found guilty after a due process and the punishment is removal of the official instead of levying of fine. Such deterrent action alone can put some fear in the banks and result in the enforcement of the regulations laid down by the RBI. I have consistently been arguing, even while in service, that the RBI should not be seen as a paper tiger if it wishes to see that its regulations are scrupulously followed. I had seen, while on an official tour, how banks in Thailand (one generally gets the impression that consistent with the nature of its society, the authorities would be relaxed in their approach) were so scared of the Bank of Thailand (BOT) that an official of a commercial bank phones the concerned senior official of the BOT and secures the permission for sending a weekly return with half an hour delay !! This call was naturally made well before the appointed time for receipt of the return !
- A.Chandramouliswaran
