The news is not surprising. What is surprising is that this has been brought by a private agency instead of by the regulators and law enforcing agencies.
The banking system handles and holds a lot of money is not a secret. The selling of Gold coins, insurance products etc has enabled banks to cover up all illegal transactions. The new generation Private sector banks are a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products without perhaps getting vetted by the regulators. They know very well that the system permits or tolerates aberrations and the aberrations are at whole scale. It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach. Banks know the weaknesses and they are smart in violating the rules and regulations . The auditors are their own paid employees and they cannot be expected to point out irregularities. On the contrary they help the banks to cover up the transactions.
The only way to stop banks from indulging in money laundering activities to ban the sale of insurance products and gold in branch premises. Further, the regulator has to tighten its noose by increasing the number of branches taken up for inspection and improving the scrutiny standards of the data they get at periodical intervals.The banning of gold sale will also help to fight black money and minimise investments in gold at least through banks.
Dr.T.V.Gopalakrishnan
This comment is given in response to the news item that appeared in Times of India dated 15/3/13.
The banking system handles and holds a lot of money is not a secret. The selling of Gold coins, insurance products etc has enabled banks to cover up all illegal transactions. The new generation Private sector banks are a challenge to the regulatory system and they are ahead of the regulators in introducing innovative products without perhaps getting vetted by the regulators. They know very well that the system permits or tolerates aberrations and the aberrations are at whole scale. It is practically impossible for the regulators to check each and every transaction that takes place in banking.Further the present inspection also does not expect to be transaction based as per the liberalised approach. Banks know the weaknesses and they are smart in violating the rules and regulations . The auditors are their own paid employees and they cannot be expected to point out irregularities. On the contrary they help the banks to cover up the transactions.
The only way to stop banks from indulging in money laundering activities to ban the sale of insurance products and gold in branch premises. Further, the regulator has to tighten its noose by increasing the number of branches taken up for inspection and improving the scrutiny standards of the data they get at periodical intervals.The banning of gold sale will also help to fight black money and minimise investments in gold at least through banks.
Dr.T.V.Gopalakrishnan
This comment is given in response to the news item that appeared in Times of India dated 15/3/13.
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