Bank of Baroda, which is in the spotlight for alleged illegal remittances of Rs 6,000 crore, has decided to appoint an external accounting firm for full review of its know your customer (KYC) compliance and its effectiveness across all branches.
The bank said it is undertaking a “comprehensive review to identify deficiencies in the structure, processes and systems” in order to prevent recurrence of such an incident.
PS Jayakumar, BoB’s new MD & CEO, said, “My utmost priority is to examine the current situation and bring about the necessary changes within the bank to ensure such unfortunate incidents do not recur. This will include the appointment of an external accounting firm for full review of our KYC norms and its effectiveness across all branches.” “I am deeply committed to resolving this issue and seek the support of all stakeholders during this period,” he said after taking charge on Tuesday, two months after his selection as the MD and CEO. The bank will make a detailed presentation to the audit committee within a week.
“The bank and its board of directors are deeply distressed by this incident and take an extremely serious view of the matter. The bank is undertaking a comprehensive review to identify deficiencies in the structure, processes and systems, with a view to prevent recurrence of such an incident,” said Jayakumar, who was earlier co-founder and CEO of VBHC Value Budget Housing.
BoB admitted systemic failures in its operations. “There are many unanswered questions which continue to be probed, such as opening of current accounts in spite of inconclusive KYC process in some cases, individual failure of detection of irregularities, non-follow up of system alerts to track exceptional transactions and reasons for the long lead time to identify these irregularities,” the bank said.
“We have taken swift action, including suspension of five officers and change in the concurrent auditor firm of the specific branch. The Department of Financial Services was immediately informed about the same, post which the concerned investigation agencies — CBI and the Enforcement Directorate — were approached to conduct a detailed probe of this matter,” BoB said.
The bank is getting a full-time CEO after almost 14 months. After SS Mundra who joined the Reserve Bank as the Deputy Governor, the bank has been functioning without a full-time CEO since August 2014.