AN Indian parliamentary committee has recommended suspending the licences of four multinational banks - Standard Chartered Bank, Bank of America, ANZ Grindlays and Citibank - for their involvement in a massive securities scandal. Publishing its final report after a 17-month probe, the committee of 30 lawmakers blamed Indian and foreign banks for misusing funds to fuel speculation in the Bombay stock market in 1991 and 1992, leading to an artificial boom. The report also indicted the Finance Ministry for failing to supervise the stock exchange adequately and ignoring signs of fraudulent activity. It said Finance Minister Manmohan Singh must be held accountable to Parliament, but it did not recommend any sanctions against him. Foreign banks were ''initiators of the scam as well as the major players,'' the report said. The banks misreported millions of dollars in their books and illegally diverted government bonds to make funds available to selected stockbrokers for quick speculation, the report said. The report had harsh words for all four banks, but reserved its toughest for Standard Chartered. ''The demarcation of responsibilities between the 'front' office and the 'back' office got diffused and controls totally weakened'' at the bank, it said. ''There has been a complete abdication of responsibilities by the back office,'' it said, accusing Standard Chartered of ''dummy transactions to transfer profit or conceal the true extent of depreciation in securities''. It also accused the bank of manipulating investment and accounting records. It said Citibank had also attempted to conceal the turnover of business with brokers. When the scam was discovered in April 1992, the stock market crashed. The foreign banks had violated the regulations of the Reserve Bank of India and of their own countries, said the 474-page report released in Parliament. ''It is necessary that stringent penalties, including suspension of licences, are imposed on these banks . . . Legal action should be pursued both in India and the foreign country concerned,'' the report recommended. It also recommended that executives of at least two Indian banks be prosecuted. The report accused the RBI of ''gross negligence'' in failing to uncover the scam. ''These irregularities were a matter of common and general knowledge. In fact, this was defended as normal market practice by the banks,'' it said. ''Red alerts were ignored, reports consigned to the back-burner and market intelligence treated with disdain,'' it added. A spokesman for Standard Chartered said: ''There is absolutely nothing new in the report, which was widely expected to be critical.'' The document was only a recommendation to the Parliament, he added. Standard Chartered had not yet seen a full copy of the report, so could not comment further.