In the wake of alleged violation of Know Your Customer norms by a large number of banks, the government and Reserve Bank of India are looking at the possibility of hiking the penalty which can be imposed on the erring banks.
"The maximum penalty under the law is Rs 1 crore (Rs 10 million) now and that is very less.
“There is active discussion now on increasing limit of penalty. So that is something which is under consideration," Banking Secretary Rajiv Takru told reporters in Mumbai on Thursday at the sidelines of LIC Board meeting.
"As a matter of fact, this (hike of penalty) was discussed at the RBI board and a point was made that the penalty amount is probably less," he added.
The regulator has sent show-cause notices to the erring banks and is awaiting their replies to take appropriate corrective measures, Takru said.
However, he did not specify how much should be the quantum of increase.
Referring to the Cobrapost expose and the punitive actions being planned on erring banks, Takru said the RBI had already issued show-cause
"The RBI has clarified that they have issued show cause notices to the banks concerned.
“They are probably waiting for the reply now.
“This is the final stage before any action is taken," Takru said.
In a reply to a question on any mismatch between the findings of the report and statements from RBI top management, he said till the decision is taken, nobody should take any public statement as the final word on the issue. "Not sure, what has come out in the media, the RBI report is anyway being acted upon. . .
“The RBI can only take a final stand after the show-cause notice is replied to.
“So, I don't think you should take any statements by anyone as finality in this case," Takru said.
Newsportal Cobrapost in its sting operations has alleged that major private and public sector banks have been flouting money laundering as well as KYC norms.