RBI and the Financial Intelligence Unit of the Finance Ministry have failed in their jobs.

The online magazine Cobrapost.com on Saturday took “strong exception” to the Reserve Bank of India (RBI) downplaying charges of money-laundering against three private sector banks and alleged that it was trying to mask “miserable failure” of its regulatory mechanism.

Criticising RBI Deputy Governor K.C. Chakrabarty’s statement in which he had said that there was no scam behind the alleged Cobrapost expose, the online portal’s Editor, Aniruddha Bahal, said it was a “brazen attempt” by the senior RBI official to give a clean chit to these banks – ICICI Bank, HDFC Bank and Axis Bank – even before probe into the matter was over.

“The manner in which the RBI Deputy Governor has rushed to issue the statement, even before the Central Bank could complete the inquest it has initiated into money laundering practices by the three banks, even before these banks could complete their own investigations into the alleged misdemeanour of their officials, and even before the Income Tax Department could come up with its own finding, is tantamount to be self-serving and is a brazen attempt on the part of the Deputy Governor to not only give these banks a clean chit but also mask the miserable failure of the banking regulatory mechanism of the RBI,” he said in a statement.

Refuting Mr. Chakrabarty’s statement, Mr. Bahal said for the RBI to say that there was no offence as there was “no transaction”…was a “wilful ignorance of rules and regulations supposed to be crafted and implemented by the RBI itself.” “Operation ‘Red Spider’ by Cobrapost clearly shows that the RBI and the Financial Intelligence Unit of the Finance Ministry have failed in their jobs.

http://www.thehindu.com/todays-paper/tp-national/tp-newdelhi/rbi-trying-to-mask-regulatory-mechanism-failure-cobrapost/article4543382.ece

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Chakrabarty downplays Cobrapost exposé

Says money laundering allegation not proved yet & monitoring system working well; will tighten know-your-customer norms if required

http://www.business-standard.com/article/finance/chakrabarty-downplays-cobrapost-expos%C3%A9-113032100204_1.html
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After trashing Cobrapost sting, RBI Guv frets over money laundering 

Amids allegations of money laundering in leading private sector banks, Reserve Bank Governor D Subbarao today 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.

http://www.financialexpress.com/news/after-trashing-cobrapost-sting-rbi-guv-frets-over-money-laundering/1091981