Cobrapost expose: RBI action soon; banks start cracking whip

Amid fresh allegations of money laundering by banks, RBI and several banks today said actions are being taken against erring institutions and employees for violating prudential banking norms.
The central bank has already completed investigations against banks and would take action against guilty institutions, RBI Governor D Subbarao said in Srinagar.
"We have done investigations, we have prepared an internal report. There are processes to be followed to take investigations to its logical closure...
"The first is action against individual institutions who are involved in practises which are not consistent with the banking regulation and prudential banking", Subbarao said.
RBI, he added, has already taken systemic action to deal with the problem and many of them were announced in the annual policy document unveiled last week.

On when the action was likely against erring banks, the RBI Governor said, "not possible to indicate time frame as there are processes involved."

SBI and Indian Bank have already taken action against employees figuring in online news portal Cobrapost's expose on Monday that accused a large number of public and private sector banks and insurance firms, including SBI and LIC, of running nation-wide money laundering racket.
SBI Chairman Pratip Chaudhuri in Chandigarh said: "We have suspended three people who suggested and encouraged people to avoid tax. Possibly, sitting in a bank this (suggesting to customers) is wrong. Inquiries are going on and each of inquiry is being handled by senior officials. I wish not to disclose further detail in order to preserve inquiry."

Indian Bank CMD T M Bhasin told reporters in Chennai that the bank has placed under suspension R Manohar, an Assistant General Manager, for giving "hollow" advices to public.
Meanwhile, continuing its expose Cobrapost released fresh instances of alleged money laundering by banks, both in public and private sectors.