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The Reserve Bank of India (RBI) has sent showcause notices to ICICI Bank, HDFC Bank and Axis Bank, the three private lenders named in the first of three Cobrapost ‘sting’ cases.
A confidential report by the central bank after a probe into the videotape-backed allegations of money laundering by employees of these banks in the expose confirmed diverse violations of regulatory norms.
These included use of fictitious Permanent Account Numbers (PAN) issued by the income tax department, use of unknown non-resident ordinary accounts, unauthorised gold sales, non-compliance with Know Your Customer norms and irregular staff junkets for bank officials selling insurance.
In the showcause notices, sent last Wednesday, the central bank has told the three entities to explain why no action should be taken against them and why a penalty should not be imposed.
In a subsequent ‘sting’ operation, revealed earlier this month, Cobrapost charged more banks, public and private sector, and insurance companies similarly. The Union government’s Financial Services Secretary Rajiv Takru said notices were sent only to the three private banks as the audit was complete in their case. “In the case of the public sector banks, we don’t even know yet what has happened. They (banks) have already suspended some of their employees,” he said.
A day after Cobrapost made its second lot of money-laundering allegations, the government-owned entities named had suspended 15 employees and taken other action against 16 others.
