HSBC rattled by allegations of grave financial impropriety
12 November 2012
HSBC India which claims to offer sophisticated solutions to complex financial problems is now grappling with complex problems of its own after anti-corruption activist turned politician, Arvind Kejriwal levelled serious and highly damaging allegations of financial impropriety last week at a press conference in New Delhi.
Kejriwal claimed the bank was hand-in-glove with industrialists in stashing money overseas and ''erroneously'' putting the name of India's richest industrialist in its list of beneficiary account holders in Switzerland.
It also faces allegations of mis-selling insurance and mutual fund products, and others and though most of these charges had not been proved as yet, and the bank's management in India had also denied a few, a number of inconvenient questions still remain to be answered.
The lender is already under lens in the US over allegations that it violated anti-money laundering rules and was likely to be fined over $1.5 billion in addition to facing criminal charges (See: HSBC says laundering probe could cost it over $1.5 bn).
In April 2011, the lender had been penalised by the banking regulator for mis-selling derivative products to its customers. The bank was one among several that failed to carry out RBI's instructions on due diligence as regards the suitability of products and sale of derivatives to users not having the right risk management policies.
According to a recent media report, the bank had stopped selling insurance and mutual fund products in India following claims of mis-selling and certain sharp practices. The report had been denied by HSBC.