Cobrapost alleges role of PSU banks in money laundering

Cobrapost alleges role of PSU banks in money laundering

In its second expose within two months, portal Cobrapost on Monday alleged that several public sector banks and insurance companies were involved in money laundering practices “blatantly” violating  KYC and other norms  to convert black money into white.

 Public sector lender State Bank of India and Life Insurance Corporation were named in the list 23 major banks and insurance firms. Other major banks among those named by the Cobrapost  in the sting are Bank of Baroda , Punjab National Bank , Canara Bank , Tata AIG, Dhanlaxmi Bank , Indian Bank , IDBI Bank , Yes Bank , Federal Bank , Reliance Capital and Birla Sunlife.

 In a release, the portal said “…it establishes beyond doubt that money laundering is not confined to private banks, and is not an aberration, as is being made out in certain quarters…. it is rather endemic, overarching the entire banking system and insurance sector, without exception, however shocking it might be".

 In a similar operation in March this year, the same portal had accused private banks like HDFC Bank, ICICI Bank and Axis Bank of helping their customers convert black money into white.

 The portal also alleged that there has been a “concerted effort” not only on the part of these banking majors involved but also on the part of the RBI and the Finance Ministry “to debunk these alarming revelations as aberrations, or even worse, as nothing to get perturbed about”.
 The portal alleged that banks and insurers accepted huge amounts of unaccounted cash, opened fictitious accounts to route cash into various investment schemes without the mandatory PAN card or adhering to KYC norms.

 The banks also helped the clients open accounts in extension counters a couple of months before the investment matures, credit the return in that account, withdraw the money and then close the account, the portal alleged. Extension branches of the banks are seldom audited, it said.

 The finance ministry, however, said it had taken note of the development and that  there was a need to examine the allegations before reaching any conclusion. The ministry has also asked the CMDs of the named banks to probe the allegations.

 Financial Services Secretary Rajiv Takru said, "I have asked Indian Banks Association (IBA) to look into Cobrapost allegations”.  He said three senior officials have been asked to look into the issue.

 State Bank of India Chairman Pratip Chaudhuri said the bank would investigate the allegations and take “severest” action against those found guilty but defended defended bank’s internal mechanism to check money laundering.

Analysts, however, said that such allegations on PSU banks can erode the faith of poor from the banking system at a time when the government is making attempts for financial inclusion and extend banking outreach to rural poor.

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