FM says plug the loopholes in IPO norms

The finance minister also said that he had made his views clear to Sebi, the RBI and the concerned bank management, who had understood the seriousness of the problem and had assured to take action.

Market regulator Sebi had unearthed thousands of benami demat and savings accounts in banks that were used by one Roopaben Panchal of Ahmedabad to invest in the IPO of Yes Bank. Sebi had asked NSDL to plug the loopholes in the “know your client” guidelines.

‘‘Stringent action will be taken against the offenders and simultaniously the system would be improved to ensure that such a loophole does not exist and if anybody tries do so the system will detect such a defaulter,’’ Chidambaram said.

Meanwhile, RBI governor Y.V. Reddy said in Pune that prompt action would be taken against banks found violating anti-money laundering norms. On the unearthing of ’benami’ accounts in banks to invest in IPOs, Reddy said, ‘‘We have already called for an explanation and there will be prompt action and under the new policy of transparency, any penalty imposed or any action taken against the bank will be put in public domain.’’

However, Reddy said the banks would be given an opportunity to explain. ‘‘Till now, all indications are that violations of the instructions are by select branches and there is absolutely no bearing on the banking system,’’ he added.

Over six banks, including a private sector bank, two public sector banks and a foreign bank have been implicated in the IPO mess.

RBI policy on PSU capital soon

MUMBAI: Finance Minister P. Chidambaram said the RBI would soon address the problems being faced by public sector banks to raise capital. ‘‘PSBs will have headroom to raise further capital. The Reserve Bank of India has come out with a discussion paper on Tier I and Tier II capital in which there is a new classification on what Tier I and Tier II capital is,’’ he said. Public sector banks need to maintain their status as government entities and cannot allow government holding to fall below 51 per cent. However, in a bid to raise capitalto meet Basel II norms, most PSBs have almost reached this limit.