Lok Sabha Question No. 3522 (UNSTARRED), answered on 2018-03-16
Subject: Irregularities by Multinational Banks
Ministry: FINANCE
Asked by: MANSUKHBHAI DHANJIBHAI VASAVA

## GOVERNMENT  OF INDIA

## DEPARTMENT  OF FINANCIAL  SERVICES LOK SABHA

## MINISTRY OF FINANCE

## UNSTARRED QUESTION NO. †3522

TO BE ANSWERED  ON THE 16 TH  MARCH 2018/ PHALGUNA 25, 1939 (SAKA)

## Irregularities  by Multinational  Banks

## †3522.  SHRI MANSUKHBHAI  DHANJIBHAI  VASAVA:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Government  is unaware  of the irregularities committed  by  the multinational banks;
- (b) if  so,  the  details   thereof   and  the  reasons  therefor   along   with   the  reaction   of  the Government  thereto;
- (c) the number of  irregularities committed  by  the banks  during  the last three  years; and
- (d) the details  of the action  taken  thereon  along  with  the outcome  thereof?

## ANSWER

## The Minister  of State in the Ministry  of Finance (SHRI SHIV PRATAP  SHUKLA)

- (a) to (d):   With  regard to irregularities committed  by  the multinational banks,  Reserve  Bank of India  (RBI)  has stated  that   specific  information is  not   available,   other   than   that   contained   in press releases issued by  RBI regarding  penalising  of foreign  banks  for contraventions of RBI's guidelines/instructions and advising  them  to exercise  caution,  brief  details  of which  are as below:
- (b) RBI imposed penalty  of Rs. 1 crore  on Credit  Agricole  Corporate  and Investment  Bank, as per press release dated October  20, 2016.  The bank  was involved  in providing  a host of services to and earning  fees from its outsourcing  agency,  Credit  Agricole  CIB Services Pvt. Ltd.  The penalised  activities  were  not permissible  under  Section  6(1) of the Banking Regulation  Act,  1949.
- (a) Based  on  scrutiny   of  advance   import   remittances   in  21  banks,   to  examine   alleged irregularities in  opening   and  monitoring of  accounts,   including   violations   under the provisions  of the Foreign  Exchange  Management  Act (FEMA), and after looking  into the effectiveness  of systems  and processes for implementation of Know Your  Customer (KYC) norms/ Anti  Money  Laundering  (AML)  standards,  RBI, vide press release  dated July  27, 2016, advised Standard  Chartered  Bank  to put in place appropriate  measures  and review  them  from time  to time  to ensure strict  compliance  with  KYC requirements  and FEMA provisions  on an ongoing  basis.
- (c) RBI imposed  penalty  on 5 authorised  dealer  banks, viz., Bank of America,  Bank  of Tokyo Mitsubishi,  Deutsche  Bank, Royal  Bank of Scotland  and Standard  Chartered  Bank, for violation   of  RBI's  instructions   on  reporting   requirements  under FEMA,  on December 21, 2016.
- (d) RBI imposed  penalty   on  HSBC   Ltd.   for  violation   of  RBI's  instructions   on  reporting requirements under FEMA, on April  26, 2017.

As reported  by  RBI, data for frauds reported  by  Indian  banks  and foreign  banks  are at Annex-I and Annex-II respectively.

## Lok Sabha USQ No. †3522 for  16.3.2018,  regarding  'Irregularities  by Multinational  Banks' Frauds Reported  by Indian Banks with  Overseas Operations

## (Amount  involved  in each individual  fraud  Rs. 1 lakh or above)

| Bank               | 2014-15          | 2014-15                     | 2015-16          | 2015-16                     | 2016-17          | 2016-17                     |
|--------------------|------------------|-----------------------------|------------------|-----------------------------|------------------|-----------------------------|
|                    | Number of frauds | Amount involved in lakh Rs. | Number of frauds | Amount involved in lakh Rs. | Number of frauds | Amount involved in lakh Rs. |
| AllahabadBank      | 47               | 7597.64                     | 23               | 29090.8                     | 60               | 89508.67                    |
| AxisBankLtd.       | 187              | 33713.54                    | 227              | 33836.39                    | 222              | 202037.9                    |
| Bank ofBaroda      | 303              | 122602.4                    | 255              | 166810                      | 224              | 116484.7                    |
| Bank ofIndia       | 131              | 9244.37                     | 156              | 121757.6                    | 162              | 277400.7                    |
| CanaraBank         | 114              | 17563.19                    | 94               | 158978                      | 119              | 61016.51                    |
| HDFCBank Ltd.      | 218              | 1753.29                     | 260              | 9728.98                     | 313              | 16034.61                    |
| ICICIBankLtd.      | 433              | 26977.16                    | 588              | 34771.52                    | 686              | 41269.94                    |
| IDBI Bank Limited  | 56               | 55795.1                     | 129              | 26205.31                    | 107              | 113683.5                    |
| IndianBank         | 95               | 9103.97                     | 87               | 13805.59                    | 79               | 48022.73                    |
| IndianOverseasBank | 138              | 57564.11                    | 109              | 59832.95                    | 95               | 137210.7                    |
| PunjabNationalBank | 180              | 230973.1                    | 131              | 35285.23                    | 160              | 280916.5                    |
| StateBankof India  | 651              | 161854                      | 562              | 189551.5                    | 544              | 242237.1                    |
| SyndicateBank      | 208              | 79310.45                    | 178              | 164068.1                    | 166              | 37623.15                    |
| UCOBank            | 87               | 141097.7                    | 85               | 24814.88                    | 59               | 69548.24                    |
| UnionBank ofIndia  | 111              | 36982.69                    | 146              | 129772.9                    | 111              | 92072.33                    |
| Total              | 2959             | 992132.8                    | 3030             | 1198310                     | 3107             | 1825067                     |

Annex - II Lok Sabha USQ No. †3522 for  16.3.2018,  regarding  'Irregularities  by Multinational  Banks'

Frauds Reported  by Foreign Banks with  Overseas Operations (Amount  involved  in each individual  fraud  Rs. 1 lakh or above)

| Bank                                  | 2014-15          | 2014-15                     | 2015-16          | 2015-16                    | 2016-17          | 2016-17                     |
|---------------------------------------|------------------|-----------------------------|------------------|----------------------------|------------------|-----------------------------|
|                                       | Number of frauds | Amount involved in lakh Rs. | Number of frauds | Amount involvedin lakh Rs. | Number of frauds | Amount involved in lakh Rs. |
| AbuDhabiCommercialBank PJSC           | 1                | 6.91                        | 1                | 2488.94                    | 0                | 0                           |
| AmericanExpress BankingCorp.          | 176              | 1007.51                     | 187              | 641.83                     | 166              | 558.54                      |
| Bank ofBahrain&KuwaitBSC              | 0                | 0                           | 0                | 0                          | 1                | 6.97                        |
| Bank ofNovaScotia                     | 0                | 0                           | 0                | 0                          | 1                | 13                          |
| CitibankN.A.                          | 94               | 848.88                      | 115              | 510.51                     | 177              | 1171.58                     |
| CTBC Bank                             | 3                | 11165.25                    | 1                | 2000                       | 0                | 0                           |
| DBS Bank Limited                      | 3                | 3442.4                      | 3                | 7111.53                    | 1                | 8.19                        |
| DeutscheBank (Asia)                   | 2                | 15.25                       | 1                | 1.5                        | 1                | 6.17                        |
| DohaBank Qsc                          | 0                | 0                           | 0                | 0                          | 3                | 897.94                      |
| FirstrandBank                         | 0                | 0                           | 0                | 0                          | 2                | 2711.65                     |
| Hongkong&ShanghaiBanking              | 38               | 2645.75                     | 36               | 8611.77                    | 48               | 99.13                       |
| Corporation Ltd. HSBCBank OmanS.A.O.G | 1                | 32.91                       | 0                | 0                          | 0                | 0                           |
| Korea ExchangeBank                    | 0                | 0                           | 0                | 0                          | 2                | 2.28                        |
| MashreqBank PSC                       | 0                | 0                           | 1                | 3.66                       | 0                | 0                           |
| PTBank Maybank IndonesiaTBK           | 0                | 0                           | 0                | 0                          | 1                | 1778.18                     |
| ShinhanBank                           | 0                | 0                           | 2                | 584.16                     | 0                | 0                           |
| StandardCharteredBank                 | 81               | 8737.96                     | 127              | 366.03                     | 320              | 651.87                      |
| TheBank ofTokyo- Mitsubishi UFJ,Ltd.  | 0                | 0                           | 0                | 0                          | 1                | 123.96                      |
| TheRoyalBank ofScotlandN.V.           | 2                | 19.48                       | 7                | 11.04                      | 1                | 1                           |
| Total                                 | 401              | 27922.3                     | 481              | 22330.97                   | 725              | 8030.46                     |

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