Reserve Bank of India (RBI) Governor D Subbarao has assured Parliament standing committee on finance that it will take stern action against banks that allegedly facilitated money laundering, the panel's head, Yashwant Sinha, on Tuesday said.

"The committee has asked the RBI governor to take stern action against banks and bank officials who indulged in money laundering and the RBI governor has assured strictest possible action against them," Sinha told reporters. Last month, news website cobrapost.com released videos that showed personnel of HDFC, ICICI and Axis banks allegedly providing information to customers on how to convert their black money into white through the banking system.

The three banks have ordered internal investigations and placed some employees under suspension, pending investigations. RBI has already initiated a probe into the alleged breach of certain norms by the three banks. The final report was to come by March 31.

Subbarao had appeared before the parliamentary panel to clarify as to what prompted RBI to invite applications for new banks. He informed the panel that the central bank has not yet received any application for new banks.

On February 22, RBI had issued guidelines for new banking licences. Eligible entities will have to submit their applications for setting up a new bank on or before July 1.

The panel recommended RBI should give preference to those applicants who will set up branches in un-banked areas over and above the mandated 25 per cent. (Business Standard)