Encourage FDI, ease labour norms, says Hansen

Lars Peter Hansen, the 2013 recipient of the Nobel Prize in Economics, spoke to the media in the country on Monday, and discussed the global impact of Brexit and the role of central banks in pushing growth. He said: “The central bank (RBI) should continue, as it has been, focussing on controlling inflation... If the government wants reforms for the Indian economy, it should encourage more FDI.”

The Reserve Bank of India (RBI) has slapped a penalty on Bank of Baroda (BoB) and HDFC Bank for violating know your customer (KYC)/anti-money laundering (AML) norms. While Bank of Baroda has been fined ~5 crore, HDFC Bank has been penalised ~2 crore.

“The RBI has imposed a penalty of ~20 million (~2 crore) on the bank on account of pendency in receipt of bills of entry relating to advance import remittances made and lapse in adhering to KYC/AML guidelines,” said HDFC Bank in a notice to the exchanges. The lender added it has also implemented a corrective action plan to strengthen the internal control mechanism to avoid such incidents in the future.

“The RBI carried out the | Bank of Baroda (BoB) has been fined | HDFC Bank has been penalised | | Punjab National Bank said RBI has imposed an aggregate penalty of Last year, a foreign exchange scam was unearthed at BoB | These accounts were later

traced to HDFC Bank | RBI had asked all banks to conduct an internal audit of their KYC/AML mechanism to prevent such lapses It has taken necessary preventive measures/ comprehensive action plan to avoid its recurrence, PNB said.

Last year, a ~6,000-crore foreign exchange scam was unearthed at BoB. However, later these accounts were traced to HDFC Bank where the fraud was believed to have started. As part of this scam, funds were transferred to accounts in Hong Kong for certain import transactions that were not carried out.

Earlier this year, RBI had asked all banks to conduct an internal audit of their KYC/AML mechanism to prevent such lapses. In fact, BoB had also appointed an external auditor to find out the loopholes in its system and suggest ways to plug it. Apart from the banking regulator, the case is also being investigated by the Central Bureau of Investigation and Enforcement Directorate.