ICICI suspends 18; Axis removes tainted staff from key roles

Last Updated: Sat, Mar 16, 2013 05:54 hrs

ICICI Bank on Friday suspended 18 employees, pending investigation, following allegations that it was one of three private lenders operating a money laundering racket.

"ICICI Bank has suspended 18 employees, pending enquiry," the bank's spokesperson said. The largest private sector lender in the country has also constituted a high-level inquiry committee, to report in two weeks.

Axis Bank has removed employees said to have been involved in the racket from operational roles, pending enquiry, and relocated them to the bank's administrative office, sources said. (BIG THREE FACE THE HEAT)

Several private banks have swung into action and asked their employees to strictly obey compliance standards and desist from making illegal promises to customers to get new businesses, after online magazine Cobrapost's allegations.

In a communication to employees, ICICI Bank reiterated it had been and would conduct its business by adhering to high standards of compliance to law and regulations. "ICICI Bank always puts 'compliance with conscience' above anything else in conducting business and has zero tolerance to any violations of its code of conduct," a spokesperson of the bank said.

Rana Kapoor, founder, managing director and chief executive of YES Bank, wrote a letter to employees saying he wanted to make it clear to every YES banker that even a single violation of the anti-money laundering (AML) and know-your-customer (KYC) regulations would be very seriously viewed by the bank's vigilance department and top management.

"I would further want retail operations and corporate operations, including operations of risk management and central vigilance, reporting to Kapil Juneja, to ensure we do not have a single violation of this nature in YES Bank. I expect a clear report to be submitted to me no later by Friday," Kapoor added.

On Thursday, Cobrapost had said its undercover investigation revealed ICICI Bank, HDFC Bank and Axis Bank offered money laundering as a product to customers and violated several provisions of the Income Tax Act, Foreign Exchange Management Act, Prevention of Money Laundering Act and regulations mandated by the Reserve Bank of India.

While bankers claimed employees are advised at periodic intervals not to violate norms, a fresh set of communications mandating strict adherence to compliance were sent after Cobrapost's allegations.

N Kamakodi, managing director and chief executive officer at City Union Bank, told Business Standard: "After yesterday's event, we sent a message to our employees to be more vigilant. We take any violation in compliance very seriously and have zero tolerance towards offenders."

Karur Vysya Bank's senior executives met on Thursday evening to review their systems and processes, to ensure that they are alerted in case of any violation of norms.

"I am not alarmed and am reasonably sure this kind of thing does not happen in our bank. But just to be cautious, we are re-examining our systems and processes. We want to ensure that our system is robust enough to detect any transaction that fails to comply with the regulations," said K Venkataraman, managing director and chief executive officer of Karur Vysya Bank.

A senior executive at IndusInd Bank said: "We have been doing it consistently for many years. At the end of every quarter, our managing director stresses on the need to follow the compliance culture, avoid mis-selling, and adhere to ALM and KYC norms. It is an ongoing activity and in the wake of recent events, it will be reiterated."

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