RBI guidelines to curb terror financing

In order to combat financing of terrorism and unlawful activities,the Reserve Bank of India has asked banks to be extra cautious...

In order to combat financing of terrorism and unlawful activities,the Reserve Bank of India has asked banks to be extra cautious before opening an account of a customer. Financial institutions are required to verify that a persons name does not feature in the list of individuals and entities approved from the Security Council Committee established pursuant to various United Nations Security Council Resolutions (UNSCRs). Banks should scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Banks have been advised that full details of accounts bearing resemblance with any of the individuals or entities in the list should immediately be intimated to RBI and the Financial Intelligence Unit-India, the apex bank has said.

RBI has said that banks should maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether individuals or entities listed in the schedule to the Order (referred to as designated individuals and entities) are holding any funds,financial assets or economic resources or related services held in the form of bank accounts.

In case a bank finds that an individual or an entity is in the list then an order to freeze the assets of such persons or entities would be issued within 24 hours. The order would take place without prior notice to the designated individuals or entities. However,if any individual or entity has evidence to prove that the freezing of funds,financial assets or economic resources or related services,owned by them has been inadvertently frozen,they shall move an application giving the requisite evidence,in writing,to the concerned bank. After necessary verification,the funds would be unfrozen within 15 days.

BANKS WILL NOW DISPLAY INFO ON WEBSITES

MUMBAI: The Banking Codes and Standards Board of India (BCSBI),an independent and autonomous watch dog to monitor the banking ethics,has reviewed the Code of Banks Commitment to Customers-July 2006 to bring in more transparency in the system. After adoption of the code,which is voluntary,banks will have to display on their websites all customer-centric initiatives. It will be mandatory for member banks to display policies on cheque collection,compensation,grievance redressal and security repossession by banks on their website. Banks will have to disclose full information on interest rates,including the reference rates to which floating rates of interest are linked,minimum interest rate,

interest rate reset clause etc. The referencerate will be uniform for the loan contracted at all points of time. Under the new code member banks will convey in writing the reasons for rejection of loan,irrespective of the amount. ENS