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Cobrapost expose: RBI initiating action against banks over money laundering allegations

Thursday, 11 April 2013 - 3:36pm IST | Place: New Delhi | Agency: PTI

Reserve Bank Deputy Governor HR Khan on Thursday said the central bank is initiating action against ICICI Bank, HDFC Bank and Axis Bank in connection with allegations of money laundering by Cobrapost.

"Actions are on the way. Scrutiny has been done, actions is being taken both in respect of systemic level and at the individual banks," he said when asked if RBI has completed investigations on Cobrapost exposes.

"I will not be able to tell you the details but actions are being taken. Actions are being initiated both at the system level and the individual bank level," he said on the sidelines of an event organised by National Housing Bank in New Delhi.

Asked when RBI would release the investigation report, he said, "I can't give you time frame but it will be out soon." The country's three largest private banks — ICICI bank, HDFC Bank and Axis Bank -- were last month named by online portal Cobrapost for indulging in money laundering.

The sting operation conducted by the portal alleged that some bank officials had offered to launder unaccounted money by investing in insurance schemes.

Soon after the exposes, Reserve Bank Governor D Subbarao had said some corrective steps will be taken to strengthen the banking system.

"...I believe systems are largely safe. However, there is a need for some corrective action and based on the findings of the investigation, we will take corrective action" he had said.

"I cannot at this time say or make broad, sweeping statement that there are no transactions taking place at all," the Governor had said.

The footage taken in 'Operation Red Spider' purportedly shows a number of senior executives of the three banks verbally agreeing to take huge amounts of cash from the undercover reporter and putting them into a variety of long-term investment plans so that the black money ultimately is converted into white.

Following the sting operation, ICICI Bank suspended 18 employees while HDFC Bank has initiated an audit inquiry besides suspending 20 staff. Axis Bank has also formed a senior-level committee to oversee an internal inquiry and asked 16 employees concerned to report to the administrative office.


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