RBI fines 12 banks in DCHL loan default case
The Reserve Bank of India (RBI) has fined 12 banks, including ICICI Bank, Axis Bank, Canara Bank and Corporation Bank, a total of Rs 1.5 crore in relation to the Deccan Chronicle Holdings Ltd (DCHL) loan default case. This fine has been levied as a result of not following proper procedures while lending to DCHL.
"After considering the facts of each case and the individual bank's reply, as also, personal submissions etc., by some of the banks before its Committee of Executive Directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty as determined above," RBI said.
The banks collectively had a total exposure of around Rs 4,000 crore.
ICICI Bank, the second largest lender of the country, has been slapped with a fine of Rs 40 lakh, the highest penalty in this case. The remaining 11 banks have been fined between Rs 5 lakh and Rs 15 lakh.
"RBI had been communicating with the banks for a while now, seeking clarity on the know your customer (KYC) procedure and due-diligence with regard to lending to DCHL. The central bank had been trying to ascertain what was lax on the bank's part in this case," said a senior official from a bank fined by RBI.
"After considering the facts of each case and the individual bank's reply, as also, personal submissions etc., by some of the banks before its Committee of Executive Directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty as determined above," RBI said.
The banks collectively had a total exposure of around Rs 4,000 crore.
ICICI Bank, the second largest lender of the country, has been slapped with a fine of Rs 40 lakh, the highest penalty in this case. The remaining 11 banks have been fined between Rs 5 lakh and Rs 15 lakh.
"RBI had been communicating with the banks for a while now, seeking clarity on the know your customer (KYC) procedure and due-diligence with regard to lending to DCHL. The central bank had been trying to ascertain what was lax on the bank's part in this case," said a senior official from a bank fined by RBI.
"This action is not intended to pronounce upon the validity of any transaction or agreement entered into between the bank concerned and the borrower," the notification added.
A forensic audit conducted by Canara Bank had revealed owners of DCHL had taken loans by mortgaging the same property with multiple lenders. This was conducted after the media firm had started defaulting on the loans to the lenders.
Based on a complaint by Canara Bank, the Central Bureau of Investigation had also filed a case against T Venkattram Reddy, chairman of DCHL, for criminal conspiracy, cheating and forgery.
9 others The Reserve Bank said it had "carried out
a scrutiny of the loan and current accounts of
Deccan Chronicle Holdings, in certain branches of
the 12 banks in late 2013". Based on the findings of
the scrutiny, the RBI issued showcause notices to
these banks in March 2014, to which the individual
banks submitted written replies.
Mumbai: The Reserve Bank of India (RBI) on Friday fined 12 banks a sum totalling Rs.1.5 crore after scrutinizing their dealings with Deccan Chronicle Holdings Ltd in 2013.
Twelve private sector and public sector banks namely, ICICI Bank Ltd, HDFC Bank Ltd, Axis bank Ltd, Kotak Mahindra Bank Ltd, IndusInd Bank Ltd, Yes Bank Ltd , State Bank of Hyderabad, Andhra Bank, Canara Bank, Corporation Bank, Ratnakar Bank Ltd and IDBI Bank Ltd were fined between Rs.40 lakh to Rs.5 lakh each, according to a RBI press release.
ICICI Bank was fined the highest at Rs.40 lakh, while IDBI Bank and Axis Bank were both fined Rs.15 lakh each.
Andhra Bank, Canara Bank, Corporation Bank, IndusInd Bank, Kotak Mahindra, State Bank of Hyderabad and Yes Bank were fined Rs.10 lakh each.
“Based on the findings of the scrutiny, the Reserve Bank issued show cause notices to these banks in March 2014, to which the individual banks submitted written replies.
After considering the facts of each case and the individual bank’s reply, as also, the personal submissions etc, by some of the banks before its committee of executive directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty as determined above.”
RBI said without giving any more details. Comments from the banks are awaited. “This action is not intended to pronounce upon the validity of any transaction or agreement entered into between the concerned bank and the borrower,” RBI said.
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