MUMBAI/NEW DELHI (Reuters) - The Reserve Bank of India has asked banks to ensure they comply with rules regarding monitoring of export advances that flow into India, saying lenders needed to ensure that outbound shipments are carried out within the stipulated time frame.
“Banks should exercise proper due diligence and ensure compliance with KYC (know your customer) and AML (anti-money laundering) guidelines so that only bonafide export advances flow into India,” the RBI said in a statement on Monday.
The central bank also said “chronic defaulters” may be referred to the government’s Directorate of Enforcement (DoE) for further investigation.
The crackdown follows a probe by Indian investigators into dubious trade finance deals with Iran through which at least $150 million (99 million pounds) was obtained from a state bank in what investigators suspect was a fake export invoicing scam.
A source close to the Enforcement Directorate, a state law enforcement agency, has told Reuters that the real amount of money siphoned out of UCO Bank was likely to be far greater.
UCO Bank, into which Indian refiners pay 45 percent of the cost of their oil imports from Iran, has told clients that it is tightening up its compliance procedures. The bank has denied any wrongdoing.
Reporting by Neha Dasgupta and Devidutta Tripathy in Mumbai and Nidhi Verma in New Delhi; Editing by Douglas Busvine, Rafael Nam and Louise Heavens