Shares in private sector banks fell sharply on Friday sending the broader Sensex and Nifty benchmarks lower. On Thursday, Cobrapost, an online magazine, claimed to have caught on camera what it described as a massive expose, which allegedly proved that some of the largest private sector banks in the country help in money-laundering. The banks involved have denied the accusations. (Read full story here)
ICICI Bank, India's biggest private lender, fell nearly 5 per cent to Rs 1,056, while HDFC Bank shares were down over 2 per cent to Rs 635. Axis Bank shares also traded with 2 per cent cuts at Rs 1,317. The BSE banking index slumped 2 per cent against a 0.7 per cent decline in the broader Sensex.
A press release by Cobrapost on Thursday described its "expose" as a "pan-India undercover investigation spanning several months, unearths a vast, nation-wide money laundering racket being run by HDFC Bank, ICICI Bank and Axis Bank. The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money."
The banks involved have denied the accusations. (ICICI Bank statement, HDFC Bank statement, Axis Bank statement)
Reserve Bank of India deputy governor Urjit Patel told NDTV on Thursday that the RBI is collecting information and it have been in touch with the banks.
He added that no showcase notice has been sent to the banks so far.
Global investment bank Goldman Sachs said it is difficult to ascertain the impact of the expose.
If proved true, it could potentially lead to slower growth across private banks' deposits and businesses, Goldman Sachs said, adding that RBI may then direct banks to focus on improving risk management.
Disclaimer: NDTV cannot verify the authenticity of the video footage, filmed largely on hidden camera, and shared by Cobrapost executives at a press conference in Delhi on Thursday.
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