India to regulate incentives for bank staff

Aims to prevent a recurrence of money laundering and tax evasion.

The new set of rules could be issued by the Reserve Bank of India, the central bank, and the Insurance Regulatory Development Authority in the next few weeks. The rules will also scrutinize the sale of insurance policies, leading to lower revenue growth from the sale of insurance policies.

A central bank officer said RBI has no problem with banks giving incentive-linked salary, but they should take a holistic view on how to gauge employee performance, including the customer service aspect.

Regulators were forced to craft new measures following a sting operation by an online media company that showed staff at Axis Bank, HDFC Bank and ICICI Bank helping customers avoid taxes and circumvent rules to convert “black money” into “white money.”