'False and malafide' rumours add to Axis Bank's woes

Moneylife Digital Team 12 December 2016

Economy & Nation

The reputation of Axis Bank, the third largest private sector lender in India, has been receiving a daily battering on account of the large number of seizures of new currency due to the complicity of its managers. However, things have gone beyond a loss of reputation with a local newspaper speculating that it faced regulatory action and a "possible revoking of its licence". Axis Bank officials have slammed the report as 'false and malafide'. However, social media seems to be amplifying the report. Fortunately, for the banks, the three-day holiday has given it an opportunity to initiate corrective action and inform the public before Tuesday.

Further, in a regulatory filing, Axis Bank says, "...we strongly deny the contents of the said article and we reiterate that the Bank has strong systems and controls as per the norms prescribed by the Reserve Bank of India (RBI). We firmly believe that the said news is intended to spread panic amongst the general public, demoralise the staff and damage the reputation of the Bank."

The statement by Axis Bank was in response to a report on Saturday in local Hindi daily Dopahar that suggested the lender could lose its licence over alleged money laundering activities involving the suspended employees.

Meanwhile according to a report from the Economic Times, the Bank has "temporarily suspended the accounts of some bullion dealers as part of 'enhanced due diligence' to stamp out any attempt to legalise unaccounted wealth following the demonetisation announced on 8th November".

Stung by accusations that its employees have been involved in laundering black money, the lender had suspended about 19 employees over alleged breach at one of its branches. Last week, the Income Tax Department unearthed 44 fake accounts during a raid at the Axis Bank branch in central Delhi, where it is alleged that about Rs100 crore were deposited in these accounts after the demonetisation announcement on 8 November 2016.

On Monday, Axis Bank closed 2.6% down at Rs444 on BSE, while the 30-share Sensex ended the day marginally down at 26,515.

Seperately, the RBI has clarified that it had not initiated any action against Axis Bank for cancellation of its license, as held by some media reports, in wake of some officials found to be involved in violative activities post-demonetisation.

"The Reserve Bank of India (RBI) has not initiated any action to cancel the banking licence of Axis Bank in the wake of certain allegations about some serious irregularities in transactions relating to deposit/exchange of specified bank notes in a few branches of the bank," the central bank said in a statement.

Comments

User

Suketu Shah

8 years ago

Indian Swiss Bank=Axis Bank.

GLN Prasad

8 years ago

It has yet to be seen as to how many skeletons are cupboards. Whether it is Private or public, the entire operations depend on attitude of concerned Head of such branch. In the initial stages, RBI should insist for filing self affidavit by each branch head that transactions are scrutinized and there is no irregularity. In the month of Feb, they should engage private agency of Chartered Accountant to confirm that there is no irregularity and that branch has followed all directives of RBI during demonetization properly. Finally the certificate must be obtained from Chairman of the Bank that they have not noticed any irregularities connected to demonetization in the Bank.

Megha Dave

8 years ago

I can vouch for this. Axis bank is heavily in profiteering through unfair and illegal means. I had once approached the bank for a locker. The attending officer asked me to make an investment in scheme assuring guranteed 9 percent returns . This turned out to be a max life insurance policy. I got duped by 25000 rs. Next year when i checked returns it was only 6 prcnt. I went to the bank to close the policy , but they refused citing lock in period. I remember i had repeatedly asked the officer if can withdraw the investment at any point of time , to which she had assured me that i could. Although i had the policy with me , but the terms describing the lockin period was very vague and in complicated language. When i complained to the bank manager , he had admitted to his staff's mistake , but did not do anything to help me. I believe he was complicit

Venkatakrishnan G

8 years ago

As per the stories going round i dont think any bank will come out smelling roses.
There are issues in banks and people openly talk about it.

TIHARwale

8 years ago

but the matter should not end with suspension of 19,the staff assigned in IT Dept offsite Surveillance, Quality Control etc should also suspended as failed to notice adequate checks are not therein the software. Infosys banking software is Finacle is good but user Banks have to get certain requirment customised and AXIS Bank QC Dept has failed in this respect.

GLN Prasad

8 years ago

It is atip of ice berg. Generall, as Shri Gurdutt has pointed out, snatching the opportunity for business development is the priority for sincere bankers. In a private bank, I heard that in a day of test checking they have found 262 employees that misused. They have simply changed the challans with demonetized notes, when the depositors originally remitted normal courrency.

Gurudutt Mundkur

8 years ago

Not just one bank ... some more would be involved. Managers by and large are trustworthy and only a few, spread across banks branches would be eager to use the opportunity to earn some fast income which they would not have to declare before they are caught..

T S Easwaran

8 years ago

The news of raids continuing to find new currency in bulk from many centres across the country, indicate that the problem cannot be confined to one bank alone. It is reasonable to assume that many more banks, nationalized or private, may be involved in this. The temptation of earning through illegal transactions may be too much for several people who will be willing to run the risk of detection. They could be banking on the shortage of manpower from various enforcement agencies and several may get away without being caught.
RBI must be having a clear audit trail of how much new currency has moved to various bank branches. They will have to do the painful task of finding out how these currencies were disposed off by the branches. With computerized banking all banks will be able to produce statistics of account wise payout of currencies. All RBI will have to do is ask banks' IT departments to run an exception report of accounts were more than permissible amount were permitted to be withdrawn on any day. With this report the Banks and RBI can due a ABC analysis of which accounts to follow up for further investigation.