Cooperative banks are at receiving end in the wake of the Cobrapost sting which eposed some top banks involved into money-laundering. Nabard Managing Director Prakash Bakshi has, however, taken up cudgels on their behalf.
NABARD 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 said.
Reserve Bank of India has reportedly found that cooperative banks are used as conduits.
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 and earn commission.
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 its sting operation allegedly proved some executives at three top private banks — ICICI Bank, HDFC Bank and Axis Bank – agreeing to receive unverified sums of cash and put them in their investment schemes and benami accounts in violation of anti-money laundering laws.
Earlier this month, it had followed up with a similar operation, showing executives at over 20 financial institutions, including State Bank of India and Life Insurance Corporation of India, offering similar services.
The Reserve Bank has maintained that no transaction has happened while the sting also does not point to “money laundering”.
RBI Governor D Subbarao has also said: “RBI is not directly involved… even banks are not directly responsible. They are not expected to inquire about the source of income. It is for government and tax authorities to check money laundering.”