RBI and MOF Trying To Mislead Nation About alleged Money Laundering BY Private Banks

Cobrapost rubbishes RBI deputy governor's clean chit to private banks-- Times of India

NEW DELHI: Investigative website Cobrapost on Saturday said RBI deputy governor KC Chakrabarty's clean chit to private banks on allegations of money laundering was premature and preposterous "aimed at sweeping under carpet the alleged involvement of the banking majors in money laundering."

Referring to the recent undercover operation by the website showing executives of three major private banks—ICICI, HDFC, and Axis— willing to wash black money into the banking system, Chakrabarty had on March 21 said: "There is no scam (that) has happened...Let us not unnecessarily downgrade ourselves. Our system to prevent money laundering is perfect."

For the RBI to say that there is no offence as there was no transaction is a "very novice reading of the law and a wilful ignorance of rules and regulations," the website said.
"The manner in which the RBI deputy governor has rushed to issue the statement, even before the central bank could complete the inquest it has initiated into money laundering practices by the three banks, even before these banks could complete their own investigations into the alleged misdemeanour of their officials, and even before the income tax department could come up with its own finding, is tantamount to be self-serving and is a brazen attempt on the part of the deputy governor to not only give these banks a clean chit but also mask the miserable failure of the banking regulatory mechanism of the RBI," the website said.

Being a signatory of FATF ( Financial Action Task Force on Money Laundering), India has treaty obligations to "block precisely the kind of money laundering that the Cobrapost expose shows has been happening rampantly in the country's leading three private banks," the statement said.

"Operation Red Spider by Cobrapost clearly shows that RBI and the Financial Intelligence Unit of the Finance Ministry have failed in their jobs and instead of heads rolling there the RBI is intent on diluting the nature of what has been found and saving its own skin," the website said.

In its expose, executives of the three private banks offered alleged assistance in investing black money in the banking channel through various means. Some of them offered to accept huge amounts of cash and invest it in insurance products and gold, open an account to route the cash into various investment schemes of the bank, and do it all without even PAN card or adhering to the KYC norms of the banks.
http://timesofindia.indiatimes.com/business/india-business/Cobrapost-rubbishes-RBI-deputy-governors-clean-chit-to-private-banks/articleshow/19151056.cms?

Official clears Indian banks of money-laundering

Mar 21, 2013, 07.45PM IST  Economic times

MUMBAI: A senior Indian central bank official cleared three private banks of money-laundering on Thursday after an undercover media investigation led to the suspension of dozens of their employees.

The Reserve Bank of India announced that it would investigate the three banks -- ICICI, HDFC and Axis -- following an apparent sting by a reporter who had posed as a customer and sought advice on how to invest cash by circumventing existing banking laws designed to safeguard against money-laundering.

Although the RBI's investigation is not scheduled to issue its final report until the end of the month, the central bank's deputy governor told reporters that there was no evidence of any wrongdoing.

"There is not a single transaction which has taken place," said K.C. Chakrabarty, speaking in Mumbai.

"There is no scam (that) has happened ... as no transaction has taken place," Chakrabarty added.

"It has nothing to do with money-laundering."

The RBI investigation was launched after a reporter for the online Cobrapost news outlet used a hidden camera to record dozens of conversations with bank employees, which were then posted on its website.

The video shows some executives from the banks agreeing to help him with his investment plans, but no money actually exchanged hands.

HDFC and ICICI Bank have already suspended dozens of its employees who were shown in the video, while Axis has launched an internal inquiry.

http://articles.economictimes.indiatimes.com/2013-03-21/news/37903654_1_hdfc-and-axis-icici-bank-three-private-banks

Subbarao for corrective steps to strengthen banking system--- Indian Express 23rd March 2013

The Reserve Bank Governor D Subbarao today said some corrective steps will be taken to strengthen the banking system which according to him is "largely safe."

"...I believe system's largely safe. However, there is a need for some corrective action and based on the findings of the investigation, we will take corrective action" he said.

Recently allegations were made by web portal Cobrapost after it allegedly conducted a sting operation and played the purported video recording of officials of of ICICI bank, HDFC Bank and Axis Bank seemingly agreeing to receive unverified sums of cash and put them in their investment schemes and 'benami' accounts.

However, no account was opened nor any cash deposited. Insurance regulator IRDA today sought explanations from heads of insurance companies associated with the three banks.

http://www.indianexpress.com/news/subbarao-for-corrective-steps-to-strengthen-banking-system/1092180/