Money laundering: Govt says guilty will pay the price

ICICI Bank share on BSE falls 3.9%
Last Updated 15 March 2013, 18:21 IST

A day after an online portal claimed that three top private sector banks were involved in money laundering, a ‘shocked and surprised’ government on Friday said that the guilty will have to pay the price.

 “Government agencies and the Reserve Bank of India are working together to probe charges, we are collecting information, the channels have been contacted,” Financial Services Secretary Rajiv Takru said, calling the incident an unfortunate one.

 Cobrapost website had on Thursday alleged that private sector banks – HDFC, ICICI and Axis banks were receiving unverified sums of cash and putting them in their investment schemes and benami accounts in violation of anti-money laundering laws.

 The banks in question said they were probing the charges, but defended their internal mechanism to check money laundering.

 Takru, however, said that it was too premature to talk of the banks being offenders. “We need to establish that first,” he said. The secretary also said that there was a possibility of government agencies probing the alleged scam, which involved several bank branches.
 The banks allegedly offered to accept black money and invest it in insurance products and other bank services. They also offered lockers to stash the black money as claimed by Cobrapost. Takru said the information, which appears to have been collected from various bank branches at number of locations and not a single branch was a matter of greater worry.

Bank stocks hit

Online magazine Cobrapost's expose pressurised banking stocks after the Finance Ministry and RBI stated that they are investigating allegations of money laundering practices at the top three private sector lenders.  However, PSU Bank stocks like State Bank of India, Union Bank of India, Bank of India, and Punjab National Bank gained by 0.18 to 0.67 per cent, while BSE Bankex was down 1.7 per cent.
Shares of ICICI Bank were down 3.9 per cent, HDFC Bank plunged 1.7 per cent and Axis Bank dipped 0.9 per cent.

Banks to probe allegations

Mumbai, dhns: HDFC Bank said it is investigating the allegations of being involved in money laundering on a top priority basis. HDFC Bank said, "We are concerned at the allegations that have appeared in the media. The matter is being investigated on top priority.”

Like HDFC Bank, two other private sector lenders ICICI Bank and  Axis Bank also in separate statements. “ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms,” ICICI Bank spokesperson said in a statement. Meanwhile, Axis Bank in a statement issued said, “Axis Bank has systems and processes that are robust and fully compliant with extant regulations. We will examine whatever information that is brought to our notice and investigate thoroughly.”

(Published 15 March 2013, 18:21 IST)

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