The Reserve Bank of India has widened its investigation into Axis Bank, ICICI Bank and HDFC Bank to include wealth management divisions and the sale of gold coins.
This move by RBI will lead to stricter guidelines on these activities if any loopholes are found.
The India’s central bank said in a statement: "The Reserve Bank has undertaken a thematic study in respect of banks that are active in selling gold coins, wealth management products to examine whether there are systemic issues and to plug deficiencies and legal loopholes, if any."
Private sector bank staff’s business practices are in focus after online news magazine Cobrapost.com showed staff at Axis, ICICI and HDFC Banks eager to help clients and assisting them to avoid tax, or convert black money into accounted funds.
RBI has also begun "comprehensive scrutiny covering both head office and branches of three private sector banks", whose employees were exposed in a sting operation advising clients to launder money, it said.
The banks themselves, RBI, and even the Income Tax Department are investigating footage revealed by the portal.
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According to media reports RBI said: "No transaction seems to have been put through. However, the financial advice by some of the bank officials could put these banks in trouble.
The final reports on all the three banks will be completed by 31 March 2013.