Mumbai, Dec. 16: A day after the Securities and Exchange Board of India (Sebi) unearthed a racket in demat accounts, other regulators have started getting to the bottom of the muddle and finding ways to plug loopholes.

The Reserve Bank (RBI), for instance, is planning to take immediate action after the market regulator on Thursday asked it to examine the role of Bharat Overseas Bank and Vijaya Bank in opening the accounts of various benami entities and funding their IPO applications.

“We will promptly and immediately take action,” governor Y.V. Reddy said here today, without naming the two banks that have figured on the list of demat deviants.

“RBI keeps a continuous watch on the developments and will do the needful as and when required,” he said on the sidelines of a seminar organised by the Indian Banks’ Association (IBA) on corporate governance. Reddy, however, clarified that there are no systematic loopholes.

Sebi has asked the National Securities Depository to undertake a comprehensive inspection of Karvy, which provided demat facility to benami entities. Sources close to the depository also said it would carry out an investigation and submit a report to the market cop. NSDL will request Sebi to bring about changes in the existing know-your-customer regulations if it finds that they need to be tightened further.

On the other hand, sources in Vijaya Bank said the bank would also carry out investigations and action will be taken against officials, if they are found negligent.