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Firm grip on IPO scamsters

Mumbai, Jan. 6: Finance minister P. Chidambaram and RBI governor Y.V. Reddy today hinted that strong measures would be taken against those responsible for the Yes Bank demat racket. Those who helped investors open the benami accounts would not be spared either.

Last month, the Securities and Exchange Board of India (Sebi) had discovered that an investor had opened 6300 demat accounts to corner more shares during the Yes bank IPO. Sebi has named two banks ' Bharat Overseas Bank and Vijaya Bank ' where the multiple accounts were opened. Reports suggest other banks are also involved.

Reddy today said the central bank has sought an explanation from the banks housing the benami accounts. He added that prompt action would be taken if anyone was found guilty.

“There have been two rounds of detailed inspection in the case. We have called for explanations,” Reddy told reporters on the sidelines of the annual day celebration of the National Institute of Bank Management (NIBM) in Pune.

“Prompt action will be taken soon,” he added.

Chidambaram said the guilty would be dealt with firmly. Speaking to reporters at the launch of Bank of Baroda’s customer-centric initiatives, Chidambaram said the system would be improved to ensure that no loopholes exist.

“Stringent action would be taken (against the defaulters) and the system would also be improved,” he said. If anybody tries to tamper with the system, it will be detected,” he said.

He said the scam was not a system-related problem. “I do not accept systems which cannot detect multiple demat accounts related to similar addresses. I have made my view clear to Sebi, the RBI and the bank managements. I think they have realised the seriousness of the matter and are taking action,” he added.

Meanwhile, the banks concerned have been given the chance to explain their position. “Till now, there are all indications that it is a violation, total violation of instructions by select branches. But it would have absolutely no bearing on the banking system,” Reddy said.

According to Reddy, under the new policy of transparency, any penalty imposed or any action taken against the banks would be put in the public domain.

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