Early action against banks violating norm: Subbarao

Not absolutely ruling out money laundering, RBI plans to take early action against banks whose officials were recently caught on tape in a sting operation willing to indulge in serious violation of banking norms.
Leaving it to Parliament the issue of amending laws to provide heavier penalty on banks indulging in such acts, RBI Governor D Subbarao also dismissed perceptions that the central bank was going soft on errant banks.
"What action? I cannot tell you because action on this has to be taken at lower level at the RBI. So it is premature to conclude that the RBI is going soft or harsh on this.

"We got to follow a process. Just because media is investigating today, we can't say the RBI has to penalise tomorrow otherwise it is soft," he told PTI in an interview.
The Governor said that under rule of law, there is a process to be followed and it was being followed.
"After the process comes to a close, which I hope is sooner rather than later. If you believe the penalty has been too soft or too harsh, you have a privilege to make a statement," he said.

Referring to the special investigation that was done into Cobrapost's expose on some major private banks, Subbarao said the bank managements were issued show cause notices and action will be taken accordingly.

He said RBI alone cannot check money laundering and banks too cannot ascertain the source of money while taking deposits.
"Is this money laundering, we do not know...We are not saying there is no money laundering. I am saying whether this money laundering has to be investigated by a much bigger process involving much bigger agencies," Subbarao said.