RBI Would Take Action Against ICICI, HDFC And Axis Bank For Money Laundering Allegations

RBI Would take Action Against ICICI, HDFC And Axis Bank For Money Laundering AllegationsOnline banking frauds in India have significantly increased. While banking frauds in India have increased yet RBI is sleeping over the mater. Recently it was reported that ICICI, HDFC and Axis Banks have been accused of indulging in money laundering and benami transactions.

As the allegations were serious in nature and supported by evidence, both finance ministry and RBI initiated an investigation against the ICICI, HDFC and Axis Bank. Meanwhile, the banks have also initiatives their own investigation in this regard.

At Perry4Law Organisation and Perry4Law’s Techno Legal Base (PTLB) we believe that HDFC and other banks must follow sound e-discovery and cyber forensics procedure to avoid legal liability. The fact is that HDFC and other banks may inadvertently destroy the evidence when other investigation authorities of India would investigate this case.

For instance, RBI has said that it will initiate action against ICICI, HDFC and Axis Bank that have been named in the money laundering related sting operation. RBI officials have told that scrutiny has been done and action is being taken both in respect of systemic level and at the individual banks.

RBI may also release its investigation report very soon in this regard. RBI may also issue a show cause notice to the defaulting banks once the guilt is established in its investigation. After the notice the officials of the concerned banks would be given a chance of hearing and then the penalty, if any, is decided by RBI.

The condition of banking sector of India is in a poor state and is in clear violation of Indian regulations. ATM frauds, Internet banking frauds, online banking frauds, RTGS frauds, money laundering offences, etc are on in India. Even RBI has in the past imposed penalties upon many banks for failure to comply with various laws and regulations. RBI is also investigating the cyber fraud happened at YES Bank.

However, banks in India are taking RBI for granted and are not all complying with its directions and regulations. For instance, although chief information officers (CIOs) have been made mandatory for all banks in India yet banks are not following this direction. The cyber security of banks in India is also in a poor condition despite RBI’s direction to ensure the same. The cyber security due diligence for banks in India is not taken seriously by Indian banks and even mobile banking cyber security in India is missing.

It is high time for RBI to take stringent action against those banks that violate the laws of India. Further, it is also of utmost importance for the banks of India to follow cyber law due diligence in India to escape various civil and criminal liabilities.