After the earlier post in which I had indicated the unusual interest on the topic “Axis Bank” ,”License Cancelled”, one of my friends sent me a news paper report in a vernacular paper in Mumbai reproduced below.
It appears that the number of note exchange frauds reported from Axis Bank is what has triggered this report. However it appears that this is a speculation and is not true.
The article of 2013 was written in the context of the security vulnerabilities . In fact we have written many articles here criticizing Axis Bank for their deficiency in security both in the ATM as well as the Core Banking system. We have also pointed out the unfair attitude of the Bank in handling the customer’s complaints.
However, the current controversy is in the matter of exchange of new notes to favoured parties and assisting in the “Conversion” of demonetized currency. This is more a corruption of the individual Bank managers in different branches. We can fault the Bank for not building a culture of protecting the national interests. But the penalties have to be on individual staff of the branch and probably their regional heads.
In the current situation, it would not be wise for the RBI to take any action to cancel license of Axis Bank and the news report is only a journalistic over reach. However, penalties may be imposed on the Bank for the malpractices in the branch and the penalties may be heavy.
Before RBI moves in, it is the responsibility of the Bank management to take its own action against the erring branches and suspending the branch managers suspected to have committed such frauds.
I hope if the Bank takes sufficient action internally, RBI would be happy.
For the time being therefore let us kill the rumour about cancellation of license of Axis Bank.
Added: Both Axis Bank and RBI has clarified later in the day that there is no proposal to cancel the license of Axis Bank.