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Demonetisation: Axis Bank swings into action after I-T raids, takes steps to control damage

As income tax raids continue at bank branches, bankers have raised concern that the action is likely to negatively impact the morale of the banks staff in general at a time when they are already at the receiving end of the government's decision to demonetise the high denomination currencies.

According to a report in The Economic Times, the bank managements are taking steps to keep up the morale of the already over-worked staff. They are reaching out to the employees warning them about the likely unscrupulous elements who may trick them into illegal practices.

 Demonetisation: Axis Bank swings into action after I-T raids, takes steps to control damage

Reuters

Over the last few days, income tax officials have been conducting raids at various bank branches to unearth fake accounts that tax evaders have opened in connivance with the bank officials to launder their ill-gotten wealth.

At the centre of the storm is private sector Axis Bank. The bank, according to a PTI report, has suspended 24 employees and 50 accounts after the I-T raids unearthed such illegal activities.

According to the bank, the investigating agencies have visited eight branches, including five in New Delhi.

At its Noida branch alone on Thursday the tax officials detected a trail of Rs 600 crore worth of deposit by a jeweller.

"It is not that Axis Bank is under the scanner, but the person doing the transaction with us is," the bank's retail banking head Rajiv Anand has been quoted as saying in the PTI report.

True. The bank's MD and CEO Shikha Sharma too has said this in an interview to The Economic Times.

"We are embarrassed that this has happened, but these are isolated incidents given that we have more than 3,000 branches and 50,000 employees.We have had many of our customers writing to us that the bank has done a great job and, therefore, it is disappointing that a handful of people have let us down," she told the newspaper.

However, Anand has admitted that the adverse publicity was indeed affecting its brand and hoped that it will not affect in the long term.

The concern is indeed serious. The development has the potential to negatively impact the customer confidence in the bank, especially at a time when there is scarcity of cash.

However, the bank has swung into action. It has appointed consultancy firm KPMG to help it with due diligence of the transactions in question.

Apart from this, according to Anand, 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.

The bank is also in touch with the RBI on a regular basis, but has not received any communication from the government, Anand said.

The report of the third-party audit will be submitted in 10 days.

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Updated Date: Dec 16, 2016 14:12:13 IST

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