Urban cooperative banks misused for money laundering
New Delhi: Urban Cooperative Banks (UCBs), which hold deposits of over Rs two lakh crore, are being misused for money laundering causing alarm to the government.
The matter of misuse of UCBs, over which there is dual control by central or state governments through multi-state cooperative societies or state cooperative societies, was discussed during a a recent meeting of Economic Intelligence Council (EIC), chaired by Finance Minister P Chidambaram.
The meeting, which was attended by senior officials of Central Economic Intelligence Bureau (CEIB), Reserve Bank of India (RBI) and Finance Ministry, stressed for devising ways to check money laundering through these banks.
The problem of irregularities in the UCB is of "grave nature" given its wide reach and penetration across the country in the light of its 8,100 plus branches which have huge deposits to the tune of Rs 2.09 lakh crore and advances worth Rs 1.35 lakh crore.
"The issue also acquires serious proportions because it jeopardizes the hard earned money of the public which is put at stake due non-adherence to the RBI regulations or instructions and also letting the banking channels being abused by unscrupulous people in laundering money which can play havoc with the financial health, safety and security of the country," the minutes of the meeting says.
A report on Gujarat-based cooperative bank has indicated the opening of 9,166 forged savings accounts in the name of the deceased person to launder black money amounting to Rs 161 crore which was deposited and withdrawn immediately, a senior CEIB official said quoting discussions held on the matter in the past meetings of the EIC.
Several gross irregularities were also noticed in RBI reports relating to inspection of another such bank based in Uttar Pradesh.