IPO fraud: RBI says yes to tough action

RBI governor YV Reddy said, “We will promptly and immediately take action on the Sebi reference. Information given by Sebi will be useful to punish the culprits and bring them to book. The central bank will continue its vigil on the developments and will do the needful as and when required.” He, however, refrained from taking names of any bank.

Reddy ruled out the existence of any systemic lapse. “We have been telling banks to follow the ‘know-your-customer’ guidelines. Heavy precaution has been taken to avoid any irregularity. There is no evidence of a systemic lapse,” he said.

Sebi, on Thursday, had cracked down on the alleged manipulation of the allotment process of the recently concluded Yes Bank IPO. It has also alerted the RBI to examine the role of Bharat Overseas Bank and Vijaya Bank in opening the bank accounts of benami entities and funding their IPO applications.