New Delhi: In the wake of disclosure of transgressions in its network, including a case in Noida which came to light on Thursday, private sector lender Axis Bank said it has so far suspended 50 accounts and 24 employees for suspicious activities.
Asserting that investigating agencies acted on tip-offs provided by the bank itself, it admitted that the adverse publicity was affecting its brand, but hoped this was temporary.
“We would like to assure you that Axis Bank stays committed to the success of the Government’s initiative of demonetization and facilitating transition towards digitalized economy. Axis Bank is committed to maintaining the strongest operational controls and has no tolerance for undesirable behaviours that circumvent laid out processes,” a statement by the bank said.
I-T sleuths found the “fake” accounts under question in Noida belonged to companies which showed daily labourers as their directors, sources said. Branches of the bank at Connaught Place in Delhi were also raided later in the day.
This comes two weeks after the Enforcement Directorate arrested two managers of the bank’s Kashmere Gate branch, for allegedly helping cash hoarders deposit crores in several bank accounts and then transfer funds online.
Axis’s retail banking head Rajiv Anand said so far the investigating agencies had visited eight branches, including five in New Delhi, and the number of employees suspended has gone up to 24 from 19 last week.
These suspensions exclude impact of the visit by Income Tax officials to its Noida branch this morning following a trail of Rs 600 crore deposit by a jeweller. The bank called it a “visit” by I-T officials who asked for details on 30 accounts.
“It is not that Axis Bank is under the scanner, but the person doing the transaction with us is,” he said, adding at no point it has been asked to shut any branch.
The suspension of account is temporary and the bank carries out extra due diligence including a visit to account holder’s address in some cases, he said.
The bank refused to share details of amounts transacted in the suspicious accounts, but Anand conceded that a bulk of the affected accounts are in the bullion trade. Axis Bank is the largest domestic lender in the bullion import space.
It said all the accounts are KYC-compliant, but the problem arises when account-holders do suspicious transactions or those involving shell companies.
The bank has defined criteria for flagging such transactions and regularly files STRs (suspicious transaction reports) and cash transactions reports with the Financial Investigation Unit, he said, adding all suspicious deals reported/investigated till now were first reported by the bank as STRs.
The bank, which files an average of up to 200-300 STRs a month, has filed 1,500 STRs since the demonetisation announcement. Apart from the already announced third-party audits at affected branches, Anand said the bank is taking a host of other measures, including tightening control by deploying technology, and communicating zero tolerance policy to the staff.
It is also asking for proof of income from depositors in certain cases, he said. While employees of many banks have been caught for various transgressions since the note-ban announcement, transgressions at Axis Bank have been the most highlighted, especially following the Kashmere Gate branch episode in Delhi.
Anand today said it is “unfair” that his bank is being singled out, without appreciating the hard work of its 55,000-strong staff since November 10. The bank is in touch with RBI on a regular basis, but has not received any communication from the government, Anand said.
The bank said the first reports of the third-party audit will come in the next 10 days, followed by final ones in a fortnight.
Since November 10, the number of PoS transactions and mobile banking transactions have doubled, while there have been 15 lakh downloads of its UPI application, he claimed.
Meanwhile, other government sources said the Financial Intelligence Unit is planning to levy a hefty penalty on banks which failed to redflag authorities despite a surge in cash deposits after demonetisation.
The FIU felt that some of the banks did not comply fully with this instruction, raising chances of money laundering. Across India, the unit has found more than 60,000 bank accounts with Rs 1 crore and above, sources added.