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Cobrapost expose: RBI action soon; banks start cracking whip

Last Updated: Friday, May 10, 2013 - 09:01

New Delhi: Amid fresh allegations of money laundering by banks, RBI and several banks on Thursday said actions are being taken against erring institutions and employees for violating prudential banking norms.

The central bank has already completed investigations against banks and would take action against guilty institutions, RBI Governor D Subbarao said in Srinagar.

"We have done investigations, we have prepared an internal report. There are processes to be followed to take investigations to its logical closure...

"The first is action against individual institutions who are involved in practises which are not consistent with the banking regulation and prudential banking", Subbarao said.

RBI, he added, has already taken systemic action to deal with the problem and many of them were announced in the annual policy document unveiled last week.

On when the action was likely against erring banks, the RBI Governor said, "not possible to indicate time frame as there are processes involved."

SBI and Indian Bank have already taken action against employees figuring in online news portal Cobrapost's expose on Monday that accused a large number of public and private sector banks and insurance firms, including SBI and LIC, of running nation-wide money laundering racket.

SBI Chairman Pratip Chaudhuri in Chandigarh said: "We have suspended three people who suggested and encouraged people to avoid tax. Possibly, sitting in a bank this (suggesting to customers) is wrong. Inquiries are going on and each of inquiry is being handled by senior officials. I wish not to disclose further detail in order to preserve inquiry."

Indian Bank CMD T M Bhasin told reporters in Chennai that the bank has placed under suspension R Manohar, an Assistant General Manager, for giving "hollow" advices to public.

Meanwhile, continuing its expose Cobrapost released fresh instances of alleged money laundering by banks, both in public and private sectors.

Country's second largest lender Punjab National Bank's Managing Director K R Kamath said: "We have looked at the transcript and we have asked for an investigation. We will see that if the investigation brings out any systematic issue, we will definitely take corrective action."

Bhasin said: "I got the information about 11.30 am on that day and immediately I went through the entire Webcast. He has given 'hollow' advices...By hollow advices he has given wrong information. And since he has given such wrong advices, we took a call on suspending him."

Meanwhile, releasing the third instalment of the expose Cobrapost said, "It proves without doubt that this corruption is endemic, and spread through the Indian banking and insurance system."

According to the Web portal: "In this edition, codenamed Operation Red Spider Part III, we bring you 10 banking institutions ... And the murky world that exists within their walls, with junior to top level officials at dozens of branches admitting on camera their complicity in crime."

Banks named today include Bank of Baroda, ING Vysya Bank, Allahabad Bank, Bank of India, Central Bank of India, HDFC Bank, ICICI Bank and Axis Bank.

Cobrapost on Monday had accused 23 public and private sector banks and insurance companies including SBI, LIC, PNB, Yes Bank, Federal Bank, Reliance Life, Tata AIA and Birla Sunlife, of running a nation-wide money laundering racket.


First Published: Thursday, May 9, 2013 - 14:47
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