NEW DELHI: Investigative website Cobrapost on Monday released fresh videos which alleged widespread wrongdoing by a host of financial sector entities including state-run giants State Bank of India and Life Insurance Corporation and private players such as Yes Bank, Federal Bank, Reliance Life Insurance, Tata, AIG and Birla Sunlife.
If the first part focused on three private sector lenders – ICICI Bank, HDFC Bank and Axis Bank – the second set of videos seemed to cast the net wider with public sector players – Punjab National Bank, Bank of Baroda, Canara Bank and Indian Bank – among the 23 named for allegedly flouting anti-money laundering and other norms. Another set of videos, focused on public sector financial sector players, is expected to be released later this week, Cobrapost’s Anirudh Bahal told a press conference.
Monday’s disclosures, however, showed agents and bankers willing to accept large amounts of cash, offering to open bank accounts without following know-your-customer (KYC) rules, apart from claiming that they could split the cash into multiple tranches to avoid detection and even route it through accounts of other customers for a fee. Insurance company executives boasted of managing cash transactions that ran into several lakhs.
In one case, Andhra Pradesh primary education minister Sailajanath Sake allegedly stood guarantee for a proposed investment in a real estate project that was to be routed through Indian Bank. Sake, however, denied the allegations. “Don’t use big words like money laundering in my case. I am not one who would resort to such activities. I did not know that a simple recommendation would lead to such kind of unexpected controversy,” he said.
In Delhi, the finance ministry first responded by saying that it had asked the Indian Banks’ Association, the industry lobby group, to look into the videos. By evening, it issued a statement saying chiefs of public sector banks and LIC had been asked to suspend officers, pending an enquiry. Besides, the finance ministry has asked banks to conduct an immediate enquiry and send officer-wise action taken report.
The Insurance Regulatory and Development Authority (Irda) too asked companies to submit details. “The matter is under examination and appropriate action will be taken at the earliest,” Irda said on its website.
Although RBI did not issue an official statement, during a conference call with analysts, deputy governor K C Chakrabarty said the regulator’s investigations into three private banks, which faced similar allegations, had not thrown up any irregularities.
“We are looking at how banks are following up on KYC norms. There are certain differences in the manner of reporting KYC norms in each bank and there is a need to strengthen KYC guidelines. The deviations that have been detected cannot be called money laundering. If the latest address is not there in the bank’s books, it is not KYC compliant. But that does not make the transaction illegal,” he said.
While the violations may not have occurred, bank executives made tall claims during Cobrapost’s operations that lasted for over six months and were spread across several states. For instance, they offered bank lockers to stash the cash besides offering to collect money, a service that is usually not available to customers. In some cases, bank executives went to the extent of helping in transferring cash overseas through the hawala route, of course for a fee