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Indian Central Bank To Clampdown on Banking Malpractices

The Reserve Bank of India (RBI) is taking a number of steps to counter reports of large-scale money laundering and fraud in currency exchange transactions, pointing to the involvement of banking employees.

Among other measures, the RBI has asked banks to retain all CCTV surveillance footage in banks from Nov. 8 onwards until Dec 30. The directive is an attempt to assist enforcement agencies in their enquiries regarding the illegal accumulation of new currency notes.

The news came just as a junior RBI official was caught in Bengaluru trying to allegedly convert old currency valued at Rs 1.5 crore.

He was subsequently suspended by the RBI. The RBI has also asked all banks to carry out central data checking in order to spot issues.

India Today

In a statement S Mundra deputy governor of RBI said,

We have issued elaborate instructions to all banks to do the central data checking and wherever they find any inconsistency, it should be pursued further through their internal audit mechanism. Our supervisors are also carrying out similar exercise on various data points of banks and wherever any untoward kind of transactions or actions are noticed, due action would be pursued and due investigation would be carried out.

The finance ministry has asked banks take note of large deposits done by customers in old and new currency notes. In the month succeeding the surprise demonetization announcement, the Income Tax department has said that it has so far unearthed undisclosed income of around Rs 2,000 crore and over Rs 130 crore in jewellery and in cash. The tax authorities have been conducting hundreds of raids across cities over the past weeks.

A number of these raids have yielded large amount of cash in new notes. Some unconfirmed estimates put the total amount seized in new currencies to be around Rs. 150 crore. The significant amount of new currencies being illegal transferred clearly points to the complicity of bankers. According to government sources, it is believed that in urban areas it is largely the private bank employees who have been diverting cash, while in rural areas it’s the government bank employees who are acting unlawfully.

Responding to queries, Mundra clarified that no show-cause notice had been issued to Axis Bank after a large number of illegal transactions were reported in several of its branches in Delhi. He said that the banks concerned were taking necessary action against their staff. Finance Minister Arun Jaitley has warned that the law enforcement authorities were keeping an eye out for malpractices and those caught would pay a heavy price.


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