A senior executive of a large private sector bank admitted that the bank had received a show cause notice and an RBI inspection team visited its premises for an on-site scrutiny of the records.
"We were only the collecting bank for subscription to the issue but the RBI is checking everything," the executive added.
The RBI is collecting information for its report on the IPO allotment scam and wants details of the manner in which payments were made for subscribing to the shares. "It is also working on finding out the source of funds used by those involved in the scam," a source in the banking industry said.
"Despite the presence of concurrent auditors, some banks opened a large number of accounts in blatant violation of the know-your-customer norm," the source added.
So far, the RBI has inspected ICICI Bank, Standard Chartered Bank, Citibank and a few others. ICICI was a banker to the highest number of IPOs (46) in 2005.
The Sebi order on the IPO scam had named Citibank, Centurion Bank, Bharat Overseas Bank, HDFC Bank, Indian Overseas Bank, ING Vysya Bank and Vijaya Bank as alleged conduits. Sources said several banks had already started weeding out the benami demat accounts.
The RBI had last week said that it had taken up a "detailed investigation" against Bharat Overseas Bank, Vijaya Bank and "certain other banks" which were used as conduits by the alleged manipulators.
The RBI has now directed all the banks to follow the know-your-customer norm while sanctioning loans. "This comes after some banks were found giving loans against fictitious accounts for subscribing to shares in the IPOs," sources said.
The RBI has also asked the banks to check all the documents submitted by customers while opening accounts and to ensure that all suspicious accounts are investigated and weeded out.
The Sebi had first unearthed the allotment scam in the case of Yes Bank IPO. Its later investigation of the public issue of Infrastructure Development Finance Corporation revealed the huge size of the scam.
Those named in the scam, Roopalben Panchal, Sugandh, Purshottam Budhwani and Manojdev Seksaria, are accused of subscribing to shares in fictitious/benami names. They are also accused of availing loans from various banks for subscribing to the shares.
Big Brother Watching
- The RBI is collecting information for giving a final shape to its report on the IPO scam.
- It is also looking into details of payments made for subscribing to the shares.
- Banking regulator has directed all banks to follow the know-your-customer norm while sanctioning loans.
- Several banks have already started weeding out benami demat accounts.