The Reserve Bank of India (RBI) has imposed mild monetary penalties on three private banks – Axis (Rs50mn), HDFC Bank (Rs45mn), and ICICI Bank (Rs10mn). But more importantly, no prima facie evidence of money laundering However, it did clarify that a definite conclusion regarding this will require an end-to-end investigation by tax/enforcement agencies
This follows the RBI’s detailed scrutiny of accounts and compliance processes at these three banks, to investigate media allegations that bank employees were helping certain people evade taxes. The RBI is still scrutinizing 36 other banks, where the follow-up action is yet to be completed.
The monetary penalties imposed are insignificant, but we need to wait for the RBI’s final guidelines on a) wealth management services, b) marketing/distribution of third-party financial services and c) KYC norms. We compute the impact on earnings of a 25% decline in WM fees at 1-2% for Axis, HDBK and ICBK in FY14.
