How the money is siphoned off

Explaining the modus operandi, a senior bank official said, it all starts with floating of bogus companies and opening current accounts in the name of such companies. “The people who operate in such gangs get hundreds of companies registered with the Registrar of Companies, open current accounts in the name of each such company, and carry on multiple transactions by switching funds from one account to another, thereby leading to circular movement of cash,” he explained.

Once these accounts have a reasonably good transaction history, the company is sold off to the likes of Indrajit Chatterjee who park the money procured by duping various organisations.

Multiple accounts

The amount, thus collected, moves through multiple bank accounts before getting transferred through RTGS into the account of another such gang, which later pays the likes of Indrajit in cash, thereby making it difficult to trace the source of money.

According to Pallab Kanti Ghosh, Joint Commissioner of Police (Crime), a number of such cases of bank frauds have come to light recently. Most of these frauds have at least five-to-six common fraudsters. “We have been holding meetings with bankers to sensitise them on such issues,” he said.

shobha.roy@thehindu.co.in

Source: thehindubusinessline

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To curb frauds, banks plan more checks on e-transfer of funds

Electronic fund transfer from one account to another and opening of current accounts may soon become a little more difficult.

Taking a cue from the recent frauds in West Bengal, bankers are set to introduce a new set of security measures on current account operation. Savings bank accountholders may also face the heat as banks are planning to add a few more security checks on the electronic fund transfer or RTGS (real time gross settlement) channel.

In the second week of March this year, West Bengal Infrastructure Development Finance Corporation (WBIDFC) and West Bengal State Cooperative Bank were defrauded of Rs 120 crore and Rs 40 crore, respectively, through forgery of term-deposit receipts involving several public and private sector banks.

According to a senior official of Allahabad Bank, an informal working group comprising bankers and Kolkata police has been set up to suggest corrective measures.

“Based on our initial observations, we have realised that most of these frauds are being perpetrated using current accounts,” the official told Business Line.

Case Study

The working group is in the process of preparing a case study on the modus operandi of such frauds. The report is likely to be ready by June-end.

Meanwhile, the police have arrested Indrajit Chatterjee, the alleged mastermind of the Rs 120-crore WBIDFC fraud.

“We plan to approach the Reserve Bank of India with our suggestions to make the process of opening of current accounts more stringent,” the official said.

UCO Bank, on its part, has tightened the norms for fund transfer using RTGS mode.

“Earlier fund transfer could be done by tallying the account and IFSC number.

“Now we are also asking for the name of beneficiary,” a senior official of the bank said.

The bank has also put restrictions on the amount that can be transferred through RTGS from branches other than the base branch (where customer actually holds the account).

WBIDFC had transferred Rs 59 crore in August 2012 and Rs 61 crore in January 2013 through RTGS to a current account at UCO Bank’s Circus Avenue branch in Kolkata to start term deposits.

The account, however, belonged to one SA Enterprises. Though the term deposits were never started, WBIDFC was handed over two term deposit certificates.

From SA Enterprises’s account in UCO Bank, money was remitted through RTGS to accounts in Bank of India, Allahabad Bank, IndusInd Bank Ltd, ICICI Bank Ltd, Development Credit Bank Ltd, HDFC Bank Ltd and Punjab National Bank.

In another such instance, fixed-deposit receipts issued to West Bengal State Co-operative Bank, which had deposited Rs 20 crore each in UCO Bank and Indian Overseas Bank, were also found to be “fake”.

shobha.roy@thehindu.co.in

Source: thehindubusinessline

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IDBI Bank, International Cars tie-up for auto finance

IDBI Bank announced tie-up with Passenger Car Business unit of International Cars & Motors Limited (ICML) to provide auto finance to its customers.

As per the scheme modalities, ICML and its dealer network will collaborate with IDBI Bank for the purpose of retail activation in order to facilitate vehicle financing business, the bank said in a statement.

The Bank would extend financing facilities to eligible customers for purchasing Multi Utility Vehicle of ICML ‘Extreme’.

Source: thehindubusinessline

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Dhanlaxmi Bank Jan-Mar quarter net at Rs 28.66 cr

Private sector lender Dhanlaxmi Bank posted net profit of Rs 28.66 crore for the last quarter ended March 31 of 2012-13.

The South-India based bank had reported a net loss of Rs 86.51 crore over the same quarter (January-March) in the previous fiscal.

Total income of the bank during the fourth quarter of 2012-13 was marginally higher at Rs 369.25 crore, from Rs 365.42 crore a year ago, it said in a filing to the BSE.

For the full year 2012-13, the bank posted net profit of Rs 2.62 crore. The lender had made a loss of Rs 115.63 crore in 2011-12 fiscal year.

Total income in the FY13 fell to Rs 1,422.30 crore from Rs 1,537.30 crore in FY12.

Bank’s net non-performing assets (NPAs) or bad loans rose to 3.36 per cent in the fourth quarter 2012-13, from 0.66 per cent a year earlier.

Gross NPAs increased to 4.82 per cent during the quarter under review, from 1.18 per cent a year ago.

In absolute terms, net NPAs stood at Rs 261.02 crore during January-March from Rs 58 crore a year ago. Gross NPAs during this period were at Rs 380.27 crore versus Rs 104.27 crore.

Shares of the bank today closed at Rs 46.45 apiece on the BSE, up 0.11 per cent from the previous close.

Source: thehindubusinessline

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RBI auctions 10-year bond worth Rs 7,000 cr

The Reserve Bank of India on Friday auctioned a new 10-year benchmark government bond worth Rs 7,000 crore at a cut-off yield of 7.16 per cent.

The bond, which will matures in 2023 and carries a coupon rate of 7.16 per cent, will be the new benchmark paper in place of the existing 8.15 per cent bond, which matures in 2022. After the issue, the yield of the 7.16 per cent 2023 government bond ended at 7.16 per cent in the market.

According to N. S. Venkatesh, Head of Treasury, IDBI Bank, the cut-off yield shows that the 10-year paper was very well bid. “The market has already discounted at least 25 basis point (bps) cut in repo rate in the RBI’s mid quarter monetary policy which is due in June.”

“Till the policy is announced, the yield (on the new 10-year paper) may fall further to 7.05 per cent levels,” he said.

The yield on the current 10-year benchmark bond 8.15 per cent, maturing in 2022, ended at 7.40 per cent compared with Thursday’s close of 7.39 per cent. During intra-day trades the yield had dropped to 7.32 per cent.

However, the yields edged up after global rating agency Standard & Poor’s gave a negative outlook on India's long-term rating. The benchmark bond yields have fallen over 50 bps beginning this April. The yields fell on account of easing of the latest WPI inflation for April to 4.89 per cent, which compares favourably with the RBI’s comfort level of 5 per cent.

beena.parmar@thehindu.co.in

Source: thehindubusinessline

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