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SBI denies money-laundering report

The chairman of State Bank of India said US regulators told the bank to tighten internal reporting and auditing systems, but he denied they had alleged the bank was used for money laundering.

"There has been no case of money laundering. There has been no such allegation from the US regulators that we have breached any of their banking rules," Janki Ballabh, chairman of SBI, the country's largest commercial bank, said.

In an unsourced story, Business Standard newspaper said the US Federal Reserve had issued a 'cease and desist' order and imposed a monetary penalty on SBI on suspicion some of its branches in the United States were used to launder money.

A large proportion of the dollar remittances and payments from the US to India are routed through SBI's New York branch. It has four other branches in the US and a local subsidiary, SBI California.

However, Ballabh said the bank had been told to tighten its internal reporting and audit systems and create a separate department to comply with US banking laws.

"If these rules are good for the bank, we will do it," he said.

Ballabh said he would investigate other elements of the report before commenting further.

In early trading on Wednesday, SBI shares fell 1.7 per cent to Rs 183.75.

SBI shares had fallen 2.25 per cent on Tuesday.

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