IPO scam: RBI finds banks were lax
MUMBAI: As the plot thickens in what is now becoming as infamous as the IPO scam, several top banks – including some foreign banks that were caught with their hands in the cookie jar when stockbroker Harshad Mehta used bank funds in 1992 – are finding themselves caught in the sticky web of Roopalben Panchal’s crafty schemes.
RBI has found that many banks may have looked the other way when Panchal and several others opened thousands of fictitious and benami accounts, blatantly disregarding its rules and anti-money laundering laws.
For example, RBI found that Indian Overseas Bank’s Ahmedabad branch added 16,000 names to a single account without any verification.
No one from the bank’s senior management even had a hint of it, perhaps an indication of how lax inspection and supervision were. IOB officials were not available for comment.
Similarly, Standard Chartered Bank allowed about 120-1,150 cheque withdrawals from the same accounts on the same day. The foreign bank’s internal control requirements stipulate a daily ceiling of 10-15 cheques for withdrawal per account.
When contacted, the bank said that it was currently investigating the issues along with representatives of the RBI. “We will be completing it by January 20 as per RBI’s letter to us,” a spokesperson for the bank said.
SOURCE:THE TIMES OF INDIA
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