Crackdown: Now, Axis Bank suspends accounts of some jewellers, bullion dealers

The move is likely to curtail imports by the world’s second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.

( Axis Bank branch closed during a raid by Income Tax officials in the Chandni Chowk in New Delhi )

Axis Bank, India’s top importer of gold, has suspended the bank accounts of some bullion dealers and jewellers after two of its executives at a branch were arrested over alleged money laundering.

The move is likely to curtail imports by the world’s second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.

“We have temporarily suspended transactions in a few current accounts as a part of a larger enhanced due diligence exercise being conducted on transactions post-demonetisation,” the bank said in an e-mailed reply to questions from Reuters.

Prime Minister Narendra Modi scrapped 500-rupee and 1,000-rupee banknotes on Nov. 8 in a bid to flush out cash earned through illegal activities, or earned legally but never disclosed to tax authorities.

There have also been reports of people rushing to buy gold by paying as much as a 50 percent premium above official prices using their unaccounted money to skirt the note ban.

Axis did not directly comment on the arrests. Last week the Enforcement Directorate, a government agency that fights financial crime, said it had arrested two Axis bankemployees for allegedly helping launderers to buy goldwith the help of scrapped notes.

The bank said the suspended gold dealers’ accounts will be restored over the next few days after an “enhanced due diligence process”. (read more)

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