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Money laundering: NABARD gives clean chit to cooperative banks

Press Trust of India
May 19, 2013 at 02:58pm IST

Mumbai: Amid allegations of cooperative banks being used as conduits for money laundering, NABARD, which jointly regulates such lenders, has said that it has found no shortcoming pointing towards any such activity.

"Every year we do an inspection and we have not found anything like that," National Bank for Agriculture and Rural Development's (NABARD) chairman Prakash Bakshi told reporters over the weekend, when asked about the recent controversy over money laundering.

A probe launched by Reserve Bank of India following allegations of non-compliance with anti-money laundering measures and know your customer (KYC) norms by top private banks has reportedly found that cooperative banks are used as conduits.

Money laundering: NABARD gives clean chit to cooperative banks

Cobrapost had in March exposed how some executives - of ICICI Bank, HDFC Bank and Axis Bank - allegedly agreed to receive unverified sums of cash and put them in their investment schemes.

Not having the entire bouquet of service offerings, the cooperative banks tie-up with scheduled commercial banks to expand their reach. Co-operative banks can accept cash under Rs 50,000 from customers (the limit at which reporting to tax authorities sets in). They usually earn commission from larger banks for providing services.

When asked about the misuse of the system and if this amounts to regulatory arbitrage, Bakshi said, "It is the same regulation for everybody. Banking Regulation Act is same for everybody."

Online portal Cobrapost had in March made public a sting operation purportedly showing some executives at three top private banks - ICICI Bank, HDFC Bank and Axis Bank - allegedly agreeing to receive unverified sums of cash and put them in their investment schemes and benami accounts in violation of anti-money laundering laws.

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