RBI scotches rumours of Axis Bank losing banking licence
13 December 2016
Reserve Bank of India (RBI) has refuted reports citing central bank action against private lender Axis Bank in the wake of I-T raids on several of its branches, including in the capital New Delhi, and recovery of cash and jewellery worth hundreds of crores.
RBI on Monday clarified that it 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 clarification comes in the background of rumours in a segment of the media that the bank was likely to lose its banking licence,'' RBI stated.
Recent I-T dept raids on Axis Bank's New Delhi branch found Rs100 crore deposited in 44 fake accounts. The I-T department has fund Rs130 crore in illegitimate cash and jewellery from the bank since 8 November.
Two bank managers have been arrested for laundering money in the first incident of fraud.
Axis Bank, India's third-biggest private sector lender, said last week it had suspended 19 employees over alleged breaches at one of its branches in implementing a government-ordered exchange of high-value bank notes.
A Reuters report, meanwhile, said Axis Bank Ltd, India's top importer of gold, has suspended the bank accounts of some bullion dealers and jewellers after two of its executives at a branch were arrested over alleged money laundering.
"We have temporarily suspended transactions in a few current accounts as a part of a larger enhanced due diligence exercise being conducted on transactions post-demonetisation," Reuters quoted an e-mailed reply by the bank as stating.
Ever since Prime Minister Narendra Modi announced the scrapping of Rs500 and Rs1,000 notes on 8 November, in a bid to flush out black money – both undisclosed income and counterfeit currency – there has been a rush to buy gold.
There were reports of people offering to pay premiums of as much as 50 per cent above official prices to buy gold to make use of their unaccounted money after the scrapping of the high-value currency notes.
Last week the Enforcement Directorate said it had arrested two Axis bank employees for allegedly helping launderers to buy gold with the help of scrapped notes.
The bank said the suspended gold dealers' accounts will be restored over the next few days after an "enhanced due diligence process".
A Chennai-based bullion dealer, who declined to be named, said the bank had frozen his account without giving a reason. Half a dozen other dealers in Kolkata, Mumbai, Ahmadabad and New Delhi also confirmed the freezing of their Axis accounts.
With annual demand for gold at 800 tonnes, most of which is imported, India's jewellery trade generates untaxed money or ''black money'' .
A sudden dearth of cash has hurt the jewellery trade badly and bullion dealers are deferring purchases and gold imports seeing a fall in customer demand.