RBI DISMISSES MONEY-LAUNDERING CHARGES

Banks to Cover Whistleblowers ICICI & HDFC Banks offer immunity to staff who expose wrongdoings Chief executives at ICICI Bank and HDFC Bank have offered im munity to staff who expose unfair practices and violation of guide lines by colleagues, even as the Re serve Bank of India (RBI) has dis missed money-laundering allegations made about these banks by a sting operation. Chanda Kochhar of ICICI Bank Aditya Puri of HDFC Bank, and Shikha Sharma of Axis Bank have conveyed their displeasure at some of their employees being caught on camera advising clients on avoiding taxes. They have uniformly said there is zero tolerance for such acts.  "The bank lays very strong emphasis on ethical behaviour and has zero-tolerance policy with violation in this regard," Kochhar wrote in an email to ICICI Bank staff. "Any breach in this regard will not be tolerated," she wrote. The message from her competitors Puri and Sharma were similar. An Axis Bank spokesperson said, "The bank maintains highest standards of corporate governance, transparency and ethics in the conduct of its business. It has put in place robust systems and procedures that are fully compliant with extant regulations. The bank has always followed a zero-tolerance policy in regard to the adherence of prescribed rules and regulations in the conduct of its business." Reviews, Audits on at Banks Stung by Cobrapost  The operating staff is fully conversant with the value system adopted and the high standards set by the bank and these standards are reiterated at regular intervals to the staff at all levels," Axis Bank added.  The top three private sector lenders are dousing the fire lit by a sting operation by Cobrapost.com, an online news provider, that showed staff at these banks offering potential customers advice on tax evasion, money laundering and conversion of black money into well-accounted wealth. The Cobrapost.com website has scores of clips showing bank executives eagerly compromising on established practices, though no transaction took place. "There is no scam (that) has happened... as no transaction has taken place," said KC Chakrabarty, deputy governor at the Reserve Bank.  Government agencies and RBI have begun investigating these banks for allegedly promoting money laundering. Based on the preliminary enquiry, ICICI Bank informed its employees that no actual transactions were found to have taken place in respect of the specific instances reported in the sting operation by Cobrapost.com.  A review of the relevant systems and processes is being undertaken. An audit of some of the branches and the corresponding back-end processes is also being undertaken.  HDFC Bank's Puri, who appointed consultant Deloitte and law firm Amarchand Mangaldas to plug the gaps, if any, encouraged staff to focus on business and not let the event consume their energy.  Nearly 40 executives from these banks face an uncertain future as the probe is underway. Most of the recordings do not show any transaction done in violation of rules, but the loose talk they indulged in may cost their jobs. The ongoing investigation by the regulator and the hype over the incident could lead to banks losing some lucrative business as regulations may be tightened. In fact, fee-generating businesses such as private wealth management could be under lens and may have to be discontinued if the regulator spots violations.  "The Reserve Bank has also undertaken a thematic study in respect of banks that are active in selling gold coins and wealth management products to examine whether there are systemic issues and to plug deficiencies and legal loopholes, if any," the central bank said on Monday.