Will take firm action if needed: Govt on Cobrapost expose

Cobrapost.com's alleged expose about money laundering racket run by the country's top three banks- ICICI Bank, HDFC Bank and Axis Bank today not only shook the markets but also central government and banking regulator Reserve Bank of India.

Rajiv Takru Banking Secretary in a conversation with CNBC-TV18 today said that Reserve Bank of India had already contacted the banks involved in the Cobrapost sting and also stressed that if anything wrong was found then the government will comedown heavily on culprits. He however said that government was still trying to collect more information on the expose and will take corrective action only after listening to all concerned parties. 

Cobra Expose: Is money laundering a common case for banks?

Cobrapost.com, which is founded and run by an investigative journalist Aniruddha Bahal today alleged that it had conducted a sting operation exposing the nationwide money laundering racket, run by ICICI Bank, HDFC Bank and Axis Bank. It claimed to have hundred hours of video recording covering branches of these banks and their employees.

Below is the verbatim transcript of the Rajiv Takru's interview.

Q: At a time when the government is appealing to tax payers to file returns- there are these alleged violations on the country's largest banks. What is the action the government will take and more importantly has Cobrapost handed over those video recordings to you?

A: I would clarify that I was personally in State Bank of India (SBI) board meeting today when these SMSes started coming in about this expose on TV. I have seen bits and pieces of this expose and I got some downloads also from the internet. On the basis of the preliminary information I have, it showed that this sting has been carried out at various locations by the Cobrapost in different parts, I think different states, different branches and so on. It was pretty explicit from what I saw in passing. So, prima-facie appeared little serious. The Reserve Bank of India (RBI) has got into the act immediately, we have got into the act, we are trying to collect more information. The banks have been contacted by my department as well and the RBI has also contacted them. Unfortunately the governor and the deputy governor both were out of the country. I have spoken to the other deputy governors, he spoke to the CGM concerned, the executive directors and they are all on the job. We are collecting some information. It is extremely important that we don’t react in terms of a knee jerk reaction but at the same time it is also equally important.

Q: What exactly are the steps that you are taking? The banks at their end have said that they will make an investigation into these allegations their top priority. From the governments end, from the RBIs end what exactly are the steps that are being taken?

A: Let me clarify. I am glad to hear that banks are doing in-house investigation which is most welcome. What worries me about the whole thing everybody in these sting operations is coming out with a same kind of response, although it is carried out at a number of places. If these are actually bank employees, this would mean a remarkable coincidence that these people are doing it individually and coming out with the same reaction. I would say that this would need to go a little beyond in-house investigations, and that is exactly what the RBI and the government would be doing.

Q: Are you looking at a timeline to do this?

A: My timeline would be as soon as possible. At the same time I must also in all fairness give a chance to everybody concerned to come out and the RBI must also in all fairness give a chance to everybody to come out with their version. After that there would be a number of agencies which would get involved because as you said there is something about money laundering here. There would be so many things which are involved here, if this is true. I personally think that this thing is likely to drag on for some time but the corrective action and whatever firm actions are required on the part of government irrespective of which agency will be taken. I don’t think anybody should have any doubt in their mind that if there is anything wrong the government is going to come down on this with a very heavy hand.

Q: I am sure you have already reached out to the senior executives, the chairman and managing directors etc at these banks. What kind of reactions have you got from them?

A: I never spoke to anybody, but my joint secretary spoke with them and what he told me was that, they said that they are looking at it and they will give us a report by today evening. Today evening, I don't know what has happened because I was on the plane. Tomorrow morning I would know about this, but in any case the report they would give is that they are looking into it. I don't want them to jump to a conclusion but at the same time we are not going to wait for ever.