Axis Bank, HDFC Bank flouted IPL rules

New Delhi: Leading private sector lenders Axis Bank and HDFC Bank and state-owned State Bank of Travancore have violated provisions of FEMA in their dealings with BCCI in connection with IPL tournament in South Africa, says a Parliamentary panel report.

“Reserve Bank's inspection of these banks has revealed that these banks have not complied with the extant FEMA provisions and have not exercised due diligence in obtaining necessary declarations and documents, scrutinising inward remittances forms for FDI” it said.

The report of the Standing Committee on Finance tabled in Parliament on Tuesday also said the banks failed to follow the Reserve Bank's KYC (know your customer) norms.

“The committee have been informed that three banks have been identified--Axis Bank, HDFC Bank and State Bank of Travancore, Jaipur Branch--which were involved in various IPL related transactions”, the report said.

The RBI had already indicated to the Committee that it would issue show cause notices to the banks for FEMA violation in connection with cross-border transactions during second edition of Indian Premier League (IPL) tournament held in South Africa during April-May 2009.

The committee, headed by former Finance Minister and senior BJP leader Yashwant Sinha, wanted “to be appraised of the follow-up penal action taken by the RBI against the banks for non-compliance with the regulatory framework under Foreign Exchange Management Act (FEMA)”.

RBI, according to the report, had admitted there were three violations during the IPL-2 session relating to “opening of new account, Foreign Direct Investment (FDI) and sending of money”.

Source: Financial Express