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Cobra stings deep, RBI to probe top banks’ money laundering charges




Published by: Nitish Kapoor
Published on: Fri, 15 Mar 2013 at 07:46 IST
Cobra stings deep, RBI to probe top banks’ money laundering charges
New Delhi: ‘Operation Red Spider’ conducted by e-magazine Cobrapost has dragged India’s topmost banks in controversy. The sting operation alleges ICICI, HDFC and Axis banks of money laundering while the financial institutions refute these claims.
Website’s investigation videos along with a number of press releases created much uproar amongst banks, customers and other regulatory authorities. Hence, Reserve Bank of India has ordered a probe into the matter.

The information on this standardized money laundering process is being collected as of now. However, a show cause notice hasn’t been issued to the banks yet. Finance Minister P Chidambaram also said that it wouldn’t be justified to make hasty decisions and jump directly to the conclusion. He also said that he had a talk with the two banks’ chairmen.

Another newspaper report mention that Bhartiya Janata Party wants Prime Minister Manmohan Singh to take the matter seriously. Communist leader Sitaram Yechury comes strict and says that the bank’s license should be cancelled if allegations found true.

In the video, a reporter who claims to be a minister’s aide is being advised on ways to convert ‘number 2 ka paisa into number 1’. The banks on the other hand claim that they have been following legal banking norms.

Cobrapost in a press conference on Thursday said that it has recorded the banks’ malpractices in videos of hundreds hours. The tape features bank employees suggesting ways to launder money even to walk in customers. The investigating website has uploaded at least 45 recording in support of their accusations. The cassettes are collected from various branches across the country including Delhi, Mumbai, Kolkota, Jaipur, Chennai and Hyderabad.

The methods of converting black money into white include high premium insurance schemes, deposition of money in several accounts to dodge tax department. The executives are also captured offering bank lockers for storing cash which is illegal.
While the low level employees thought of it as a bank product, top management can’t be completely ignorant of the unlawful practice being carried at such a large scale.

A statement from website’s press release reads, "Our investigation, conducted across dozens and dozens of branches of these banks and their insurance affiliates, across all five zones of the country, revealed...that these money laundering practices are part of a standard set of procedures within these banks."

"We talk about people stashing ill-gotten money in tax havens like Switzerland. But the fact is Switzerlands are here in India," it added.

The statement further read, "The evidence is graphic, crystal-clear and clinching. The investigation finds the banks and their managements systematically and deliberately violating several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits".

In one instance, an ICICI manager even went on to offering an NRI account to the acting politician’s aide if he had a passport with at least one trip abroad.

Another video portrayed HDFC bank manager offering the off track services in Delhi. The man said, "HDFC baitha hi hua hai black money khane ke liye (HDFC is here to eat up all the black money)."

Cobrapost is now ready to hand over the raw footage to any authorized law enforcement agency, who is willing to look into the matter.

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