Axis Bank faces flurry of IT raids: Here's 4 point measures for the lender to emerge out of this crisis

Axis bank has been in the eye of a major storm. Its branches are being raided like no other banks. Today its branch in Noida was raided on the basis of information that Rs 60 crore was deposited into 20 accounts mostly belonging to small laborers by a wily jeweler who made the most of the opportunity to make a quick buck on the night of 8 November 2016 after the demonetisation speech by Prime Minister Modi. This comes on the back of a raid on Axis Bank’s Chandni Chowk New Delhi branch among others a few days ago where 40 fictitious accounts were opened and a huge Rs 100 crore was laundered. Shikha Sharma, MD and CEO of the beleaguered bank has come up with a kneejerk reaction. She has appointed the accounting firm KPMG to suggest measures to beef up control on such transactions. This is nothing short of bolting the stables after the horses have bolted. Unique Identification Authority of India’s portal can be accessed freely by bankers and the income tax department among others. In the event, one wonders why the bank officials did not put the accounting opening forms bearing aadhaar numbers as identity and address proof to instant scrutiny and verification as to their genuineness. [caption id=“attachment_3106092” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] But it is more likely that the bank officials winked at the shenanigans of the crooks who have first used the exchange facility with such fake identity cards and later on after exhausting this facility turned to deposits despite knowing that their goose could be cooked if such deposits were probed. Shocking and unconscionable quantities of newly minted Rs 2,000 notes thus have found their way into the clandestine cupboards of these crooks who have been permitted to withdraw truckloads of such money in crisp freshly minted notes from such newly created accounts by the fawning officials with supple conscience. Adi Godrej said once tongue firmly in cheek—consultant is one who consults your watch to tell you the time. KPMG is likely to do pretty much the same. No one single employee must be allowed to carry through the transaction on his own. This is the mool mantra of internal check auditors swear by. But then the harried banks witnessing as they did a deluge of surging exchangers and depositors threw all caution to wind. RBI has to share some of the blame for not sending a diktat on day one i.e. 10 November 2016 when banks’ sluice gates were thrown open to the public for the first time after the demonetisation announcement of 8 November 2016 that come what may deposits should not be accepted into new accounts too readily i.e. without thorough verification. Axis Bank naturally is now facing a crisis of confidence. To be sure, the bank itself is not to blame for the cupidity of some of its officials whom it has for good measure suspended and banished from scene. It is also unfortunate that crooks have found the banking system’s soft underbelly in one particular bank. A bank’s biggest asset is its reputation. And in Axis’s case that has taken a beating. KPMG may not be able to do much to shore up its image. The bank itself must take up measures to emerge out of this crisis of confidence by taking the following measures: 1) Pile up cash on its cash counters and remove all the ‘no cash’ boards. This was the strategy used to telling effect by a beleaguered bank in Arthur Hailey’s Moneychangers, a hugely popular novel; 2) Launch an advertisement blitz on media and hoardings telling that everything is all right with the bank and there is no run on its cash. It must assure the depositors that their money is safe; 3) Cooperate with the investigative agencies in nabbing the crooks and their accomplices; and 4) Last but not the least put in place an effective whistleblower mechanism even in the absence of an official whistleblower protection law that has got bogged down in the Parliamentary logjam. A colleague is idly placed to blow the lid on a conspiracy and a brewing one. Her name must be kept anonymous where possible and her life protected