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HDFC Bank, the second-largest private sector lender in India, has started re-examining the know-your-customer (KYC) details of accounts opened more than five years ago. The move comes after Cobrapost, an online magazine, alleged that HDFC Bank was one of the private lenders that violated KYC and anti-money laundering rules.
“Accounts that were opened in 2008 or before are being re-examined to find out if there was any lacuna in the system,” said a person familiar with the development, requesting anonymity. The private lender closed FY09 with over 15 million deposit accounts. A year earlier, it had 8.7 million deposit accounts. The number of accounts almost doubled during that year, as the bank acquired the business of Centurion Bank of Punjab. HDFC Bank currently has a customer base of over 28 million.
Sources said the bank had asked customers, who opened accounts in 2008 or earlier, to re-submit photo identity and address proofs. In addition to the branches, the bank has set up specific cells to receive these documents and ensure that the process is smooth.
HDFC Bank’s spokesperson was not immediately available for comments.
While other private banks that were alleged by the magazine in running a money-laundering racket have asked select customers to re-submit KYC details, those banks have refrained from re-examining the KYC details of all the accounts opened before a certain date.
“We are selective while doing re-KYC. Wherever we have doubt, we are asking customers to re-submit their KYC details,” said a senior executive with a large private bank.
In April 2013, HDFC Bank said it did not find a single transaction that violated anti-money laundering rules after it carried out an investigation and did internal audit in some of its branches. The bank had appointed Deloitte Touche Tohmatsu India to conduct an independent forensic inquiry. The Reserve Bank of India (RBI) also examined transactions in some of HDFC Bank’s branches.
Senior executives of the bank had said the lender would strengthen its internal controls if it found any weakness in its current systems. The bank had suspended 25 employees, pending investigation, who were captured on video tape offering money laundering as a product to undercover journalists of Cobrapost.
