The Hindu : Business : BoBL steps to observe KYC norms

Online edition of India's National Newspaper
Wednesday, Jan 25, 2006

Business

Business

BoBL steps to observe KYC norms

CHENNAI: Bharat Overseas Bank Ltd. (BoBL) has said that it has conducted full internal investigation into initial public offer financing at three of its branches where a few broker-related individuals and a group concern of a leading depository participant "practically outwitted the process". The concurrent auditors had not brought out the failure of `know your customer' (KYC) norms and violation of lending principles speedily, the bank says in a release.

The bank further says that full-scale audit has been taken up for the whole bank to look into the adherence to KYC and asset management liability (AML) guidelines and corrective measures are being taken.

A Chennai-based chartered accountant firm has been retained by the bank to conduct investigations and to suggest corrective steps. The bank says that it has strengthened its compliance cell and operational risk management cell which do the screen-based off-site surveillance of all high value transactions.

`No systemic failure'

Our Mumbai Correspondent writes:

The RBI Governor, Y. V. Reddy, on Tuesday said that, "there is no systemic failure" in the recent initial public offering (IPO) scam. "It is the failure of checks and balances," said Dr. Reddy, adding that, some banks "misused the facilities". He said the RBI would look into "internal regulation" of the banks. Explaining the modus operandi, Dr. Reddy said the procedure adopted was delivering money to a person other than account payee. "The procedure was for convenience, but the banks have misused it," he added.

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