The Securities and Exchange Board of India ( SEBI ) has asked Axis Bank , India's fourth-biggest private-sector lender by market capitalization, to strengthen its internal processes and systems after the regulator noticed leakage of price-sensitive information relating to financial results on WhatsApp groups before they were officially announced on stock exchanges.The regulator on Wednesday asked Axis Bank to conduct an internal inquiry on those involved in the preparation of board notes and presentations, with information access and engaged in the consolidation of figures and dissemination of information relating to financial results in the public domain.SEBI has also sought an inquiry on all the members of committees involved in generation of the original data for the purpose of determining key ratios, such as Gross non-performing assets (GNPA), net non performing assets (NNPA), net interest margin (NIM), slippages, write-offs, and current account and savings accounts (CASA).The regulator has directed the bank to complete its inquiry within a period of three months from the date of the order and submit its report.Axis Bank is one of the 12 companies whose financial results were leaked on WhatsApp groups before they were officially announced.SEBI said its preliminary examination showed that the messages circulated in WhatsApp groups almost matched the quarterly financial results of Axis Bank for June 2017, which were published subsequently.The regulator said that such resemblance of the information circulated in the WhatsApp groups to the actual financial results prime facie indicates that the figures for Axis Bank were in circulation prior to the official announcement. "The same could not have been possible without leakage of information from the persons privy to the information relating to the financials prior to the official announcement," G. Mahalingam, whole-time member of SEBI, said in his order.The regulator said that at this stage, the source and origin of the leakage of unpublished price-sensitive information cannot be ascertained. "Such leakage is prima facie attributable to the inadequacy of the processes/controls and systems that Axis Bank as a listed company had put in place," SEBI said.Last month, Reuters had reported that the financial results of some of the major Indian companies, including Dr Reddy's, were circulated in WhatsApp groups of traders just before the companies officially declared the results.Other companies whose financial results were allegedly leaked include Cipla, HDFC Bank, Tata Steel, Wipro, Bajaj Finance, Mahindra Holidays and Resorts, and Crompton Greaves Consumer Electricals.Last Friday, SEBI conducted a 'search and seizure' operation with the help of Mumbai police on 34 individuals, who are dealers and research analysts with various leading broking firms.

Source: Economic Times December 27, 2017 13:58 UTC