NEW DELHI: More than 480 urban cooperative banks (UCBs) across India have come under the scanner of the Reserve Bank of India (RBI) for alleged violation of anti-money laundering laws.
The central bank has been taking strict action like imposition of penalty and denial of branch expansion against erring urban cooperative banks (UCBs), reported The Times of India (TOI).
The RBI has issued instructions to its regional offices to undertake scrutiny of 489 UCBs to ascertain compliance of Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) guidelines, it said.
The daily added that misuse of UCBs – over which there is dual control by central and state governments – for money laundering has been a matter of concern for central intelligence agencies.
The RBI has also been coordinating with the state governments on the issue and advised strict action against defaulting UCBs.
It has issued guidelines to block accounts of all non-complying customers, sources quoted by the TOI said.
According to the report, most urban cooperative banks were lax on regulatory issues and being used as conduits for money laundering.
In a recent speech in Parliament, Indian Prime Minister Narendra Modi declared that his government was committed to recovering illicit money stashed abroad and would spare no one found guilty, even if accused of pursuing a vendetta.
The daily, quoting a report by the Central Economic Intelligence Bureau (CEIB)said that it has been observed that the problem of irregularities in the UCBs was of a “grave nature”, given their wide reach and penetration across the country with 8,100-plus branches and huge deposits.
“The issue also acquires serious proportions because it jeopardises the hard earned money of the public due to non-adherence to the RBI regulations or instructions, while allowing the banking channels to be abused by unscrupulous people in laundering money which can play havoc with the financial health,
safety and security of the country,” it said. – From Bernama