The country’s top three private sector banks — ICICI Bank, HDFC Bank and Axis Bank — said they will investigate allegations by an online magazine Cobrapost.com that their executives at some branches and insurance affiliates had offered to convert politicians’ black money (or tax-evaded income) into white (legitimate income).
Independently, the banks are likely to come under the scanner of the Reserve Bank of India, the Income-Tax Department and the Enforcement Directorate after a pan-India sting operation by Cobrapost.
The timing of the undercover operation could not have been more ill-timed as the Reserve Bank of India has just issued final guidelines for setting up new banks in the private sector.
RBI Deputy Governor Urjit Patel said the central bank is in touch with the banks and is collecting information.
In a press statement, the magazine claimed the branches of these banks accept huge amounts of cash and invest them in insurance products and gold. They also suggest to their clients to get a draft from a co-operative bank and deposit it with their bank.
According to Cobrapost, the branches open an account to route the cash into various investment schemes of the bank. They do so without the mandatory permanent account number or adhering to the know-your-customer norms laid down by the RBI. The branches help clients transfer money abroad through non-resident external/non-resident ordinary account. They also recommend to clients to split the black money into tranches to get it into the banking system without being detected, the magazine alleged.
“The bank branches use ‘benami’ (fictitious names or in relatives/ friends/ associates names) to facilitate the conversion of black money. They also use the accounts of other customers to channel the black money into the system for a fee,” Cobrapost said in its statement.
It further added that the branches allot lockers for safekeeping of illegitimate cash, including special large-size lockers to accommodate wads of cash that could run into crores. It also quotes bank officials caught on tape as saying they routinely email seniors for approval/information on such transactions.
Analysts say it is surprising that the central bank’s inspection of these banks missed these attempts at converting black money into white.
Comments:
Customer can invest in in Bank, place money in Non life product
,purchase NATIONAL SAVINGS CEERTIFICATE ETC but up to Rs 50,000 /
can even make purchases in cash but up to maximum limit of Rs
50,000 /
Customer need not submit Pancard for cash deposit / investmen up to
Rs 50,000 similarly any purchases up to Rs 50,000
I have many a times had informed Union Finance ministry /RBI that
people are investing in cash in various schemes, in name of family
members , invests at different places in different companies &
thus converts unaccounted money in to white money.
Govt/RBI has remained unresponsive, inactive
I am personally aware that these banks are offering their services for taking bribe. Many Top Executives and netas ask their clients to deposit money in pseudo accounts created in these banks and after getting e mail/sms confirmation they proceed for illegally fabvouring their clients like release of purchase orders, payment of bills, placement of contracts etc. It is a common knowledge. These banks have flourised because of money laundering only. They keep exclusive customer list and banks are almost empty. From where they are earning huge profit is very clear.
hi,
so what is so shocking about this?
only the naive do NOT know about the stranglehold of the foreign
BANKING CARTEL, on the "lobbied up" politicians and media of india.
we kicked out our rulers BRITISH EAST INDIA COMPANY ( rothschild ) in
1947, and they are back in full force on invitation.
before PM manmohan singh became finance minister he worked for
rothschild banking cartel.
indians wake up.
punch into google search KLEPTOCRACY IN INDIA, LOBBYING CRONY
CAPITALISM VADAKAYIL
capt ajit vadakayil
..
The top brass of RBI, if not the Governor, then at least the Deputy
Governor responsible for audit and inspection of banks, should get the
rap. Accountability needs to be fixed. On account of collusion between
RBI, MoF and these banks such incidents could be kept under wraps. It
is highly unlikely that RBI audits did not notice these shenanigans.
They must simply have been suppressed. On top of all this Chidambaram
has come out with an ingenious but a devious idea of allowing the
black money generators such as corporate houses, brokers, real estate
developers to set up in-house banks. How nice- instead of going to
third party banks, these black money generators can launder the ill
gotten gains in-house. The current incidents show that RBI top brass
will look the other way while giving the politically well connected
launderers a free run.
The news is not surprising. What is surprising is that this has been brought by a private agency instead of by the regulators and law enforcing agencies.The banking system handles and holds a lot of black money is not a secret.The selling of Gold coins,insurance products etc has enabled banks to cover up all illegal transactions. The new generation Private sector banks are a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products without perhaps getting vetted by the regulators They know very well that the system permits or tolerates aberrations and the aberrations are at whole scale.It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach.Banks know the weaknesses and they are smart in violating the rules and regulations. Auditors being paid by banks cannot point fingures.
KYC NORM should strictly be
followed, particularly in pvt.banks.
acountability should be fixed. For
example opening account in pvt
bank is much much easier thn
nationalised banks.
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