Banking regulator Reserve Bank of India has imposed a Rs 5 lakh fine on IDBI for violating its guidelines on opening of accounts, including joint accounts, know your customer (KYC) norms and also for violation of RBI guidelines on initial public offer financing. The Reserve Bank had issued a show-cause notice to the bank asking it why action should not be taken against the bank for violating its norms. The chairman and managing director of IDBI, V.P. Shetty had sought personal hearing with the RBI to present the bank’s case. However, the RBI concluded that the violations on behalf of the bank were substantiated and imposed the Rs 5 lakh penalty.In October 2004, the RBI said, as part of measures to improve the transparency of banks, the RBI had announced its decision to disclose in public domain information on penalties imposed on banks after due process of advising a bank and seeking its explanation so as to give reasonable opportunity to the bank for being heard. IDBI is not the only bank which has been fined by the RBI for overlooking its norms on IPO financing which resulted in some scamsters cornering shares meant for small investors.
