Aniruddha Bahal, editor of Cobrapost, told Financial Chronicle, “What is needed is punitive action and not banal platitudes. If RBI does not take action in terms of cancelling the licences of the branches involved, initiates a change in bank management and imposes stiff penalties, the issue will not sort itself out but come back to haunt us as a nation.” On its part, the government asked the chairmen and managing directors of all public sector banks and LIC to initiate immediate action against those exposed in the sting and asked for a detailed report on action taken against erring employees.
In a note to the heads of the banks, Takru said, “Any officer/ employee of your bank/institution who clearly appears to be advising potential customers along lines that would be an infringement of the legal process/ could facilitate money laundering/ could defeat the KYC norms or the norms of due diligence prescribed by RBI may be placed under suspension with immediate effect, pending inquiry. The bank may initiate a detailed scrutiny of such officers’ work and institute a special audit, if necessary, for this purpose. The inquiry must be initiated and completed expeditiously. The employees concerned should be advised to voluntarily proceed on leave while a detailed investigation is conducted.
“I have asked Indian Banks Association to look into the Cobrapost allegations. There is a need to examine allegations,” said Takru.
The Insurance Regulatory and Development Authority (Irda) in a public statement on its website said, “Irda has seen various reports appearing in the media on the alleged violations of KYC and AML (anti-money laundering) by some insurance companies. They have been asked to file a report on the allegations. The matter is under examination and appropriate action will be taken at the earliest.”
Denying the allegations, LIC said in a statement: “Our IT system itself does not accept any cash transaction beyond Rs 50,000 without quoting PAN. In addition, regular reporting is made to the financial intelligence unit, where cash is received beyond Rs 5 lakh. In addition, the training institutes in LIC have been instructed to mandatorily include AML/KYC compliance in all the trainings imparted to agents as well as employees. Still in case any violation is noticed at any level, necessary action will be taken by the corporation.” A Reliance Capital statement said, “We categorically deny the baseless allegations in relation to any involvement of the company in money laundering by customers of our life insurance business.”
The SBI share hit a low of Rs 2,183.15 on BSE in the first half- hour of trade but recovered and touched a high of Rs 2,231 after the SBI chairman denied the allegations of money laundering. The scrip finally closed at Rs 2,225.25 with a gain of 0.39 per cent. BSE’s bankex index shed 1.62 per cent to the day’s low of 13,952, but finally closed flat at 14,182.29 with a loss of 0.01 per cent.