RBI to take actions against Indian banks issuing credit cards to terrorist
By Ankit Sharma
Dec 5, 2008
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The Reserve Bank of India is planning to take actions against the Indian banks whose credit cards were recovered from the terrorists who carried away brazen attacks in the financial capital of the country, Mumbai.

RBI is waiting for law enforcement agencies to provide the details of credit cards, following which it will question the banks about the rules that require banks to know their customers and verify their credentials and credibility.

An official from RBI said, "KYC (Know Your Customer) norms already exist for opening a bank account or issuing a credit card and everyone has to follow it. It seems that someone has not followed it and there is a question of punishment for which there is a process."

Credit cards issued by Citibank, HSBC, ICICI Bank, Axis Bank, HDFC Bank and State Bank of India have been retrieved from the terrorist at the Taj Mahal hotel in Mumbai.

However RBI confirmed that they will not go by the media news and will take any action only after the conformation from law enforcement agencies. RBI feels that the banks will come to them after releasing with the police investigation. "I think they are currently caught up with criminal investigations and they will come to us with the reference on it," said the official.

KYC norms that came under effect to trace on the money linked to terrorism mandates banks to follow a process that identifies a person to whom the bank is issuing a credit card or opening an account. The norms clearly state the requirements on which banks need to ensure that the customers they are dealing with are not apprehensive.

RBI guideline on KYC states: "Banks should obtain all information necessary to establish the identity/legal existence of each new customer, based preferably on disclosures by customers themselves. Typically easy means of establishing identity would be documents such as passport, driving licence etc. However, where such documents are not available, verification by existing account holders or introduction by a person known to the bank may suffice."


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