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• Sunday, March 24th, 2013

RBI Governor Duvvuri Subbarao Stresses Upon A Need To Take Steps Against Money Laundering In IndiaBanking frauds in India is not a new phenomenon. ATM frauds, Internet banking frauds, online banking frauds, RTGS frauds, money laundering offences, etc are on rise and there is an urgent need to tackle them suitably.

Recently, after the sting operation by Cobrapost, the ICICI, HDFC and Axis Banks have been accused of indulging in money laundering and benami transactions. These are serious allegations and there should be a thorough investigation of these allegations.

Meanwhile the finance ministry and reserve bank of India (RBI) are investigating money laundering accusations against ICICI, HDFC and Axis Banks. Reports have also surfaced that these banks are also using the private investigation services in this regard. However, these banks must follow sound e-discovery and cyber forensics procedure to avoid legal liability. These banks may inadvertently destroy the evidence necessary to punish the culprits of money laundering, if any.

In fact, Reserve Bank of India (RBI) Governor Duvvuri Subbarao believes there is a need for action to prevent money laundering in the country following recent allegations against three large private sector banks.

Subbarao also opined that he cannot at this time say or make a broad sweeping statement that there are no transactions taking place at all. But he believes that the system is largely safe. He also believes that there is need for some corrective action.

He informed that RBI officials are going to the head offices of all those banks to check what the system is for detecting management-level control over these transactions. RBI is also conducting a study of the banking system on whether there are enough controls to prevent such incidents.

Meanwhile a demand was made in the Rajya Sabha on 18th March 2013 for a CBI probe into the matter and cancellation of the licences of these banks if found guilty. Surprisingly, the deputy governor of RBI has advocated his support for these banks even before the investigation report of the RBI and finance ministry is awaited.

We at Perry4Law Organisation believe that this is an unfortunate and immature act on the part of a senior official of RBI as giving a clean chit to these banks without even proper investigation would send wrong signals to offending banks. The approach of RBI Governor Subbarao is more mature and apt in the facts and circumstances of this case.

We should not encourage banks that are facing serious allegations of money laundering to feel that no matter howsoever serious the allegations are and howsoever compelling the evidence may be they cannot be touched and they would go scot free. The approach of deputy governor is exactly doing so and future incidence like these should be avoided.

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