Cobrapost: 23 Banks, insurance firms in money laundering

Cobrapost on Monday has brought out a fresh list in its latest expose, this time on banks and insurance companies involved in money laundering

May 06, 2013 11:41 IST | India Infoline News Service
Cobrapost’s expose on money laundering has now spread to encompass 23 banks and insurance companies. If you thought only private players were bending the rules, marquee state-owned names like Life Insurance Corporation of India and State Bank of India along with other PSU entities would come as a shocker.

In all, 23 banks and insurance companies have been exposed, namely, State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Bank, Indian Overseas Bank, IDBI Bank, Oriental Bank of Commerce, Dena Bank, Corporation Bank, Allahabad Bank, Central Bank of India, all public sector banks, and their insurance associates; Yes Bank, Dhanlaxmi Bank, Federal Bank, DCB Bank, HDFC Bank, ICICI Bank and Axis Bank, all private banks, and their insurance allies; besides the state-owned LIC of India, Reliance Life Insurance and Birla Sunlife, and Tata AIG, among private sector insurers.

Operation Red Spider 2 establishes beyond doubt that money laundering is not confined to private banks, and is not an aberration, as is being made out in certain quarters in the wake of the first expose on March 14 in which HDFC Bank, ICICI Bank and Axis Bank were shown involved in money laundering; it is rather endemic overarching the entire banking system and insurance sector, without exception, however shocking it might be. The scale is vast and unfathomable.

Among the private insurers, Reliance Life Insurance, a subsidiary of Reliance Capital, in a very short span of its existence of less than a decade, has witnessed spectacular growth to become the largest private life insurer in 2012.

However, the gem to fall from grace is the iconic Life Insurance Corporation of India, the largest financial institution in the country. With 300 million policies under its belt, the insurance giant manages assets worth Rs. 1,474 trillion, about 15% of India’s GDP. The LIC of India is learnt to underwrite about a-fourth of government bonds and securities, and also acts as a bulwark against unprecedented upheavals on Dalal Street, at the behest of the government, so that investors’ confidence in Brand India and in its amazing growth story does not dwindle.
If the banks don’t have their own insurance companies, they have joint-ventures with private insurers. Yes Bank, for instance, has a tie-up with Bajaj Allianz, which would question an investor only when the investment crosses Rs. 1 crore, as we came to know from a Yes Bank official. And such investments can be done in cash. Whenever we went about proposing to bankers, public or private, that we wanted to invest our black money in insurance, they immediately called the managers of the their insurance associates to our presence or sought their advice on phone, making it amply clear that banks and insurance companies are hand in glove.

How to launder black money officially?

FREE Benefits Worth 5,000



Open Demat Account
  • 0

    Per Order for ETF & Mutual Funds Brokerage

  • 20

    Per Order for Delivery, Intraday, F&O, Currency & Commodity