Subbarao for corrective steps to prevent money laundering

Bangalore (PTI): Amid allegations of money laundering in leading private sector banks, Reserve Bank Governor D Subbarao on Friday said some corrective steps will be taken to strengthen the banking system which according to him is "largely safe." "I believe systems largely safe. However, there is a need for some corrective action and based on the findings of the investigation, we will take corrective action" he said on the sidelines of an event here. "I cannot at this time say or make broad, sweeping statement that there are no transactions taking place at all," he said. RBI Deputy Governor K C Chakrabarty had downplayed the money-laundering allegations and said the country has a "perfect" system to prevent such offences and that not a single such transaction took place in the sting operation. "Allegations do not mean flouting norms. There is not a single transaction which has taken place. KYC violations will happen in any system. These are all transactional issues and have nothing to do with money laundering," he had said. The country's three largest private banks -- ICICI bank, HDFC Bank and Axis Bank -- were last week accused of indulging in money laundering both within and outside with an online portal, Cobrapost, claiming that the sting operation conducted by it had revealed a scam. While RBI initiated a probe soon after the allegations of money laundering were made by Cobrapost, insurance regulator IRDA on Friday sought explanations from heads of insurance companies associated with the three banks. The sting operation alleged that some bank officials had offered to launder unaccounted money by investing in insurance schemes. "I am aware of Cobrapost sting operations. As what we have learnt is that there are some transactions being canvassed by bank staff but no transactions have taken place," Subbarao said. "In the Reserve Bank, in the wake of this, we have instituted an inquiry in all those banks, all those branches...Transaction-level inquiry," he said. Subbarao said black money is not just a banking issue. "But as far as money-laundering is concerned and using banking as a conduit for money-laundering, we have anti-money laundering systems," he said.