RBI Probing Three Banks - Wall Street Journal (India)

By SUDEEP JAIN MUMBAI--India's central bank said Monday it is investigating ICICI Bank Ltd., HDFC Bank Ltd. and Axis Bank Ltd. for possible violations of customer verification, foreign-exchange and anti-money laundering laws. "The final reports on all three banks will be completed by March 31, 2013 and thereafter further course of action as necessary will be initiated," the Reserve Bank of India said in a press release on its website. The RBI said it is also separately carrying out a study of all banks that sell gold coins and wealth management products to examine whether there are any loopholes in the rules governing sales of such products. The central bank, which regulates commercial banks in India, said it had initiated the probes after India-based news website Cobrapost.com last week published dozens of videos purportedly showing employees of the banks giving advice to a reporter posing as a customer on how to hide money from the tax authority. A HDFC Bank spokesman said Monday he had no comment to make at this point. Spokespeople for ICICI Bank and Axis Bank couldn't immediately be reached for comment. The banks being probed are the three largest private-sector lenders in India by assets. A video on the Cobrapost website purportedly showed one ICICI executive suggesting that setting up bank accounts under identities listed as drivers or security guards would deflect the scrutiny of tax officials. Videos also purportedly showed staff at HDFC Bank and Axis Bank advising the reporter to set up multiple accounts under different names, among other options. Banks are required to share details of transactions involving more than 1 million rupees ($18,510) with tax officials. Earlier Monday, Finance Minister P. Chidambaram told reporters that the finance ministry was also investigating the allegations. ICICI Bank has suspended 18 employees pending an inquiry into the allegations of impropriety made by Cobrapost, a bank spokesman said Saturday. Axis Bank said Saturday that it had formed a senior-level committee to oversee an internal inquiry. Also on Saturday, HDFC Bank said in an emailed statement it has appointed accounting and audit firm Deloitte Touche Tohmatsu India Pvt. Ltd. to conduct an independent enquiry. —Mukesh Jagota in New Delhi contributed to this article. via Top Stories - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGc0FeeVaIEzFuBBdZpfmzJQ6T8yg&url=http://online.wsj.com/article/SB10001424127887323415304578369483295922730.html

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