Severe action will follow if there are violations: Takru

The online magazine alleges its investigation reveals three private sector banks are involved in money laundering

The government has begun probing allegations of money laundering against ICICI Bank, HDFC Bank and Axis Bank.

Rajiv Takru, secretary, Department of Financial Services, told Business Standard: "It is an important matter and we are moving fast. The truth has to be established. It will not be glossed over. The Reserve Bank of India is already dealing with the development."

Earlier today, online magazine Cobrapost claimed its investigation had revealed the three private sector banks ran money-laundering rackets.

"We are trying to understand what the actual position is. Any violation of anti-money laundering rules and regulations will be treated as a serious offence. Severe action will follow," Takru said, adding, ""What worries me is if it is true, we have to see whether it is a coincidence or something else."

He added prima facie, it appeared some of the alleged violations might be looked into by other agencies. Asked whether more banks could be involved in the alleged money laundering case, he said, "I only have access to what appeared in the media today. We will see if there is more to it. If more banks are involved, we will take action against them."

The Enforcement Directorate might probe whether the Prevention of Money Laundering Act was violated. HDFC Bank said it was investigating the allegations on a priority basis.

The Axis Bank, HDFC Bank and ICICI Bank stocks recovered in afternoon trade today. Analysts said they didn't think allegations of money laundering would hit these stocks. Today, the Axis Bank stock closed at Rs 1,354.25 on the BSE, a rise of 0.5 per cent. While the ICICI Bank stock closed 2.3 per cent higher at Rs 1,110.75, the HDFC Bank stock at Rs 649.6 (a rise of 2.3 per cent).