In November this year, when Shobit Sinha and Vinit Gupta, 2 managers of Axis Bank’s Kashmere Gate branch of Delhi were arrested for laundering the money of shell companies, they had little idea of what great travails they would be bringing upon the bank they worked for. Now, with a senior Finance Ministry official suggesting that Axis Bank’s banking licence be suspended, Sinha and Gupta, already behind bars after being arrested under relevant provisions of the Prevention of Money Laundering Act, must be repenting for their actions even more.
On his part, the Finance Minstry official, who declined to be named, has not suggested anything egregious, for after all, the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1949 do provide for the suspension of bank licence if any organization (even if it s a non banking financial company) if it is found to be violating any of the laws prevailing in India.
Gupta and Sinha are not the only two bad apples. In early December this year, Axis Bank suspended 19 employees across different states such as Uttar Pradesh, Orisssa and West Bengal for flouting mandatory guidelines while PM Narendra Modi’s demonetization drive is on in full swing.
What worked against Axis Bank was the Income Tax Department and Enforcement Directorate’s joint and robust efforts to unearth money laundering activities in the name of exchanging old, unusable legal tender.
Banks play a key role in money laundering operations- whether it is in preventing or facilitating.
The happenings at Axis Bank do not seem to be stray incidents ; they appear as a series of coordinated acts by a section of employees. It will take nothing short of a humongous effort by Axis Bank to avert the suspension of its licence. Other organizations should take note.