Cobrapost sting: RBI probe finds anomalies in PAN, KYC usage

In a probe into the issues raised by the sting operation of Cobrapost, the Reserve Bank of India has found major anomalies in banks, reported CNBC-TV18 quoting sources.

A report prepared by the central bank shows string of violations on several counts by these banks, the TV channel said.

The RBI has found that usage of dummy PAN and identity cards of unknown NROs, unauthorised gold sales and non-compliance know your customer norms are rampant among banks.

[caption id=“attachment_777065” align=“alignleft” width=“380”] The bank has also allowed use of Credit cards for buying gold. Reuters[/caption]

The central bank also found that bank staff were also going on irregular trips mostly sponsored by insurance subsidiaries of the respective banks.

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The CNBC report quoting sources said Axis Bank allowed customers to split cash deposits in order to prevent reporting under cash transaction reports. There have been large cash transactions that are not reported or even recorded.

Over the last six months, there have been transactions worth Rs 4,575 crore without PAN from the bank. The RBI also found that the bank has assigned same PAN to different accounts and as the bank’s software about 3,820 high net-worth individuals under high risk category had dummy PAN cards.

In one transaction, gold worth more than Rs 5 lakh was sold without PAN. The bank allowed to open over 5,000 current accounts on power of attorney and pre-paid cards were issued without doing the required KYC.

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ICICI Bank, meanwhile, facilitated cash transactions worth more than Rs 10 lakhs in NRO accounts from unknown sources, the RBI found. Depositors in NRO accounts did not even declare their identity.

Across 14 branches, there have been 987 cases of customers with multiple identity cards. The bank has also allowed use of Credit cards for buying gold.

ICICI Prudential, the bank’s insurance arm, sponsored foreign Trips for bank staff.

The bank also accepted cash above Rs 50,000 without PAN card.

According to the RBI report, HDFC Bank misled the RBI with false compliance on annual financial inspection. It is also non-complaint with compensation for managing director and chief executive officer.

Further, the bank authorities did not take action on staff who misappropriated Rs 1.9 lakh from accounts.

HDFC Bank also allowed use of credit cards for buying gold. The RBI found that there were several gold purchases below Rs 49,999 in a day. Further, the bank even accepted cash worth Rs 5 lakh per day per customer, the RBI found.

There have been 300 instances of HDFC Bank officials accepting cash for selling gold for over Rs 50,000 in 2012-13, the RBI report said.

These details are from only three private sector banks. CobraPost had named about 33 public and private sector banks in its various three sting operations. So this is just the tip of an ice berg.