RBI fines three more banks in IPO scam

The Reserve Bank of India has fined three more banks for violation of ‘‘know your customer’’ (KYC) norms relating to loans against shares and investing in the IPO. The three banks are: HDFC Bank — which received the highest penalty of Rs 25 lakh — followed by ING Vysya Bank Rs 10 lakh and IDBI Rs 5 lakh.

RBI had issued show cause notices to these banks and after receiving their replies found their answers unsatisfactory. HDFC Bank has been fined for not displaying prudence while opening 17 savings bank accounts with one common address. These accounts were later used to open more demat accounts and corner shares meant for small investors.

Imposing the fine on ING Vysya Bank, the RBI said the bank did not adhere to its KYC norms in opening joint savings bank accounts. ING also violated RBI instructions on IPO finance particularly the limit on maximum permissible finance per borrower.