India’s federal bank says no move to cancel Axis Bank licence

121316-axis-bankSTORY: The Reserve Bank of India (RBI) on Tuesday (December 13) denied a media report that authorities were preparing to cancel the licence of Axis Bank Limited over irregularities in transactions relating to the exchange of high-value bank notes.

The clarification comes in the background of rumours in a segment of the media that the bank was likely to lose its banking licence.

RBI deputy governor, S. S. Mundra, said that RBI had not issued any show-cause notice to the Axis Bank.

“Whenever such actions are reported inquires are being made but as of now, no show cause notice has been issued as yet,” Mundra said in Mumbai.

Mundra said the RBI was monitoring the situation of any malpractice.

“We are keeping a constant vigil on the same. We have issued elaborate instructions to all the banks managements to do central data checking and whenever they find any inconsistency it should be pursued further through their internal audit mechanism,” Mundra added.

Prime Minister Narendra Modi announced last month that 500-rupee and 1,000-rupee bank notes worth a total of 15.44 trillion rupees ($229 billion) were to be scrapped in a bid to crack down on the shadow or “black” economy and prevent counterfeiting.

People have scrambled to exchange and deposit the old bank notes since then, leading to long queues at banks. Tax officials and law enforcement agencies have unearthed malpractice and breach of rules in some cases and arrested some of its officials.

Axis Bank, which says it has suspended 24 employees so far over alleged wrongdoing, has appointed KPMG to conduct a forensic audit. Senior bank officials were also conducting a parallel probe, it said last week.

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