HDFC, ICICI banks and money laundering - 3

FP Staff Mar 14, 2013

HDFC, Axis, ICICI Bank stocks plunge on money laundering allegations

Shares of private sector banks today declined in morning trade following a money laundering expose by journalist Anirudha Bahal.

Big private sector Indian banks including HDFC Bank, Axis Bank and ICICI appear to have been targetted in a sting operation with the purported objective of discovering money laundering.

“The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money,” said CobraPost, which conduced the sting  spanning several months in various bank branches throughout the country.

Following the allegations, shares of all the three banks declined on the bourses after opening flat.

Of the three, Axis Bank was hit the most, down 2 percent at Rs 1319, while HDFC Bank is down 1.57 percent at Rs 625.15 and ICICI Bank down 0.82 percent at Rs 1077.

The BSE Sensex, on the other hand, was down 0.29 percent at 19372.

“A six-month long undercover investigation by Cobrapost, codenamed Operation Red Spider, found dozens of officials of HDFC Bank, one of the oldest and most prestigious private banks in India, willing to help convert black money into “white”,” says the expose.

While HDFC Bank said there was no basis for such allegations, ICICI Bank has constituted a high-level inquiry committee to investigate into the matter.

“ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms. We have demonstrated our commitment to this by following a zero tolerance policy towards any violation. We are deeply concerned with the media reports.

We want to assure our customers and all our other stakeholders that we are committed towards adherence to the high standards of business conduct, which is expected of us.We have constituted a high level inquiry committee to investigate into the matter and submit its findings in 2 weeks.”