Axis Bank dismisses 24 staffers, suspends 50 accounts after I-T raids

A preliminary report is expected in 10 days, final report in three weeks

Axis Bank, country's third largest private sector lender,  that has come under the Income tax and Enforcement Directorate's lens said that it has suspended 50 accounts at the moment.

Apart from this, the bank has also fired 24 employees and investigations are going on in eight of the bank's branches.

"We file a STR (suspicious transaction report) with FIU (Financial Intelligence Unit) if we notice any doubtful transactions. These accounts and branches where investigative officers have visited have been based on these STRs filed by the bank," said Rajesh Dahiya, Executive Director, Corporate Centre.

The management added that usually, they file 200-300 STRs a month. However, after demonetisation, in the last five weeks the bank has filed about 1,500 STRs. Once these STRs are filed the bank is required to carry a more detailed KYC report which requires meeting and assessing the income earning capabilities of the account holder and also submission of more documents if needed. Once the bank receives satisfactory answers these accounts may be allowed to be operation again.

These STRs are raised if there is a mismatch in the amount deposited and the profile of the account holder or if there is an increase in frequency of deposits.

As a result, the number of 50 accounts that are suspended may change in the coming days, added Dahiya. Some of these accounts that have been suspended are bullion accounts.

The bank has hired KMPG to do forensic audit of the branches and strengthen mechanism to put stringent internal checks in place. The preliminary report is expected in the next ten days whereas the final report is likely to come in three weeks.

Rajeev Anand, Executive Director-Retail Banking, Axis Bank said that according to the internal audit, there have not been any lax on KYC in the bank's processes. However, some employees have colluded with some account holders to manipulate the system.

"Axis Bank's brand has been hit and we are concerned. These employees are bad apples and black sheep and some of the transactions done by them are being investigated. The senior management is travelling across the country to various branches to tell the employees that we have a zero tolerance policy on these things," added Dahiya.

Even though a majority of the eight branches in questions are in Delhi, the management explained that this isn't a location specific problem. 
 

Anand added that there are instances when one account is flagged which leads to several accounts which are related to the main account getting flagged in the same area as well.