No Laundering, Says State Bank Chairman

The chairman of India's state-run State Bank of India (SBI) said US regulators told the bank to tighten internal reporting and auditing systems, but he denied they had alleged the bank was used for money laundering.

"There has been no case of money laundering. There has been no such allegation from the U.S. regulators that we have breached any of their banking rules," Janki Ballabh, chairman of SBI, the country's largest commercial bank, told Reuters.

A large proportion of the dollar remittances and payments from the US to India are routed through SBI's New York branch. It has four other branches in the US and a local subsidiary, SBI California.

 

Ballabh said the bank had been told to tighten its internal reporting and audit systems and create a separate department to comply with US banking laws.

"If these rules are good for the bank, we will do it," he said.

Banking analysts said there have grey areas in the regard to the jurisdictions of two regulator -- US Fed and Reserve Bank of India. The State Bank of India has not violated any rules and its books are in order in conformity with the Reserve Bank of India regulations. However, US Fed has been claiming jurisdiction on certain accounts which belong to the RBI's domain."SBI may be forced to follow certian norms to keep its US operations in tact but that does not mean that it has violated any norm. In fact, SBI has a very clean image abroad," said an overseas banker.