Reserve Bank of India (RBI) Deputy Governor K.C. Chakrabarty, on Thursday, said that there is no money-laundering involved in the Cobrapost-expose conducted on three leading private banks - ICICI Bank, Axis Bank and HDFC Bank.
“There is no scam that has happened,” said Dr. Chakrabarty here, after a meeting with select bankers.
“KYC (Know Your Customer) violations will happen in any system. These are all transactional issues… nothing to do with money laundering. People may not be paying tax and some money flows into the system…….Our people have gone for scrutinising, not only these (three) banks, but we do it for all other banks,” he added.
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Cobrapost.com, an online news portal , claimed last week that the banks offered different types of laundering practices to its undercover reporters. All three banks have denied the allegations of money-laundering.
“There is not a single (such) transaction which has taken place. If we find there is a need to further tighten any guidelines, we will do that,” Dr. Chakrabarty added.
Elaborating on the definition of money laundering, he pointed out that money laundering meant that the source of money had to be involved with a criminal activity. “So let us understand—money on which the tax is not paid, and money laundering, are two different things. Let us not unnecessarily downgrade ourselves,” said Dr. Chakrabarty. He added, however, that there might be other irregularities like not adhering to KYC norms and suspicious transactions. There are sufficient guidelines, and banks are following them. All our financial stability reports highlight that we have serious concerns over bank branches selling gold coins, mutual fund products, insurance......it involves multiple regulators, it involves KYC requirements. We are going for a large scale financial inclusion drive, if KYC norms are too stringent, then banks will not open accounts.”
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“You don't need a sting operation to show that, in this country, people have black money. Some black remains in the bank account, for that do you require a sting operation?” he asked. “Don't say that our system is so bad…. we cannot take action based on allegations. Our supervisory process is very effective, we are always doing that, if we find something is wrong, we will always take action…. Nothing has come to our notice. I am not saying there is no problem. Even without the sting operation, I know there is a problem in the system,” Dr. Chakrabarty added.