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Banks to report deals over Rs 10 lakh to RBI

Major banks, including the State Bank of India, would now report all cash transactions over Rs 10 lakh (Rs 1 million) to the Reserve Bank of India in a bid to monitor unaccounted cash flows mainly for terrorist activities through the banking channels.

"We are already monitoring individually the transactions above Rs 10 lakh (Rs 1 million). There is no problem in reporting it to the RBI," SBI chairman Janki Ballabh said while affirming the bank's decision to comply with the apex bank's instructions last week.

Reserve Bank deputy governor G P Muniappan, in a meeting last week, asked bankers to follow the instructions on monitoring high-value transactions in line with the principles of "know-your-customers" followed by bankers internationally.

RBI had asserted that banks were required to keep a close watch of cash withdrawals and deposits for Rs 10 lakh (Rs 1 million) and above in deposit, cash credit or overdraft accounts and keep record of details of these large cash transactions in a separate register.

The central bank decided to implement this practice in India especially after the terrorist attacks in US and India followed by large scale movement of funds by banned terrorist outfits world over.

Bank sources said the instructions assumed importance for those bankers, which have overseas branches and handle hefty cash flows across the borders.

Weeks after last year's September 11 terrorist attacks in US, the United Nations had named some of the India-based banks, which were used by terrorist outfits to transfer funds from the Asian nations to US and other developed nations.

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