By : raj kumar makkad on 13 December 2009
Mumbai: The income tax (IT ) department in a raid on a
chartered accountant (CA) last week unearthed a money
laundering racket running into over Rs 1,000 crore.
The CA, Mukesh Choksi, through his several companies
generated fake bills showing share transactions in the
name of his customers who wanted to convert their black
money into white. The department also recovered a
pay order of 1 million and came across another onetime
transfer of Rs 10 crore in a private bank account.
A senior I-T official said, Choksis modus operandi was
innovative. He referred to the previous days share transactions
from newspapers and shortlisted scrips that witnessed huge trading
on the bourses. He then created fake broker notes of
intra-day trading on select shares, since these are
not reflected in the demat accounts.
Director of Investigation (I-T ) E T Lukose told TOI,
We have to do a lot of work in this case.
I am not in a position to disclose further details.
Choksi operated from a tiny air-conditioned garage
in Santa Cruz (E). He managed the entire operations
with just five computers, the official added.
He floated around 26 companies through which he
falsely claimed to have carried out share
transactions with the customers.
These companies existed only on paper .
He operated across the country through his
agents, who were mostly CAs or I-T practioners,
the official said. The department has recovered
documents containing the names of the people who
availed of his services. We are yet to reach to
the beneficiaries , Lukose said.
The cash that came from the beneficiaries was deposited
in the bank accounts of one of Choksis companies.
A cheque towards the said amount isdeposited
into the account of his another company .
The second company issues a cheque in the name
of the beneficiary. The beneficiary shows the money
as gains made from the share transactions where Choksis
companies acted as share brokers.
Choksi deducted a commission
for the services rendered , a source said. In one transaction,
officials came across a cash deposit of Rs 10 crore
in the private bank account of his company in Karnatakas
Mandya branch. The money got transferred to another account
in Mumbai for issue of pay order in favour of a charitable
organsiation in Chennai. However, the transaction got cancelled
and the money was returned to the Mandya account and was withdrawn
on the same day. We are investigating this too, the senior official
said. Sources said that Choksi had come under the scanner
twice in 2001-02 and again four years later in
connection with similar transactions. SEBI had imposed
a ban on him from operating in the market.
Monday, December 14, 2009
Barclays Bank Plc Banned from Issuing PNs: SEBI
12 December 2009
The Securities and Exchange Board of India (SEBI)
banned Barclays Bank Plc from issuing or otherwise
transacting in new Offshore Derivative Instruments (ODIs),
also known as participative notes, or PNs, for having previously
violated disclosure norms.
SEBI said the ban will be in effect “till such time as
Barclays satisfies SEBI that it has put adequate systems,
processes and controls in place to ensure true and correct
reporting of its ODI transactions to SEBI”.
It also directed Barclays to Promissory Notes
Bfurnish a certificate “from an auditor of international
standing” to this end.
ODIs or Promisory Notes are investment vehicles used
by overseas investors to buy into Indian stocks or derivatives
SEBI found irregularities in disclosures regarding
four ODIs issued on 15 December 2006, with shares of
Reliance Communications Ltd as underlying assets.
Barclays had reported these as being issued to UBS AG
when they were actually issued to Hythe Securities,
an entity regulated by the UK’s Financial Services Authority.
Subsequently, SEBI found that Hythe Securities had issued
them to Pluri Emerging Companies PCC Cell E Emerging Markets
Growth Fund. Here, too, SEBI found Barclays Bank guilty of
flouting rules, as issuers must report any onward issuance of ODIs.
A Barclays Bank spokesperson said the issue pertained to
Barclays Capital and said it was too late in the evening
to comment as they are yet to study the order.
The Securities and Exchange Board of India (SEBI)
banned Barclays Bank Plc from issuing or otherwise
transacting in new Offshore Derivative Instruments (ODIs),
also known as participative notes, or PNs, for having previously
violated disclosure norms.
SEBI said the ban will be in effect “till such time as
Barclays satisfies SEBI that it has put adequate systems,
processes and controls in place to ensure true and correct
reporting of its ODI transactions to SEBI”.
It also directed Barclays to Promissory Notes
Bfurnish a certificate “from an auditor of international
standing” to this end.
ODIs or Promisory Notes are investment vehicles used
by overseas investors to buy into Indian stocks or derivatives
SEBI found irregularities in disclosures regarding
four ODIs issued on 15 December 2006, with shares of
Reliance Communications Ltd as underlying assets.
Barclays had reported these as being issued to UBS AG
when they were actually issued to Hythe Securities,
an entity regulated by the UK’s Financial Services Authority.
Subsequently, SEBI found that Hythe Securities had issued
them to Pluri Emerging Companies PCC Cell E Emerging Markets
Growth Fund. Here, too, SEBI found Barclays Bank guilty of
flouting rules, as issuers must report any onward issuance of ODIs.
A Barclays Bank spokesperson said the issue pertained to
Barclays Capital and said it was too late in the evening
to comment as they are yet to study the order.
RBI to Tighten ECB Norms by Reintroducing Ceiling
12 December 2009
With improvement in the global credit markets and narrowing
of spreads, the Reserve Bank of India (RBI) decided today
to reintroduce the ceiling on interest rates that Indian
companies pay for external commercial borrowing.
The norms that take effect from January 2010, would permit
Indian companies to raise debt for three to five years by
paying up to 300 basis points above the London Inter-bank
Offered Rate (LIBOR). Those using the ECB window to raise
ECB-Bfunds for over five years would be allowed to pay up
to 500 basis points over Libor, RBI said in a communication
this evening.
RBI had lifted the restriction on ECBs in January, following
intensification of the global financial crisis after Lehman Brothers collapsed.
RBI also decided today to shut the special window that allowed
companies to buy back foreign currency convertible bonds to
reduce debt burden at the height of the global financial crisis.
The reintroduction of the cost ceiling and withdrawal of the
FCCB buyback facility are the latest in a series of rollbacks
RBI has introduced since the economic environment improved.
In late October, the central bank had decided to revert to
a statutory liquidity ratio of 25 per cent for Indian banks.
While the overall direction was to signal a check on excessive
inflows, RBI has eased ECB norms for telecom companies and
infrastructure-focused, non-banking finance companies.
In addition, companies engaged in the development of
integrated townships have been given another 12 months
(up to December 2010) to make use of the simplified norms
announced last year.
The simpler norms for telecom companies were an extension of
the October 2008 decision, when operators were allowed to use
ECBs to obtain 3G licenses. Now, they have been permitted to
use the route for payment of spectrum allocation, too.
A senior executive at a leading foreign bank said RBI was
signalling, through today’s moves, to check excessive flow
of capital into the country. “The high capital flows through
ECBs, FCCB and portfolio investment have pushed up the value
of the rupee against the US dollar. Another message is that
only high-quality companies should tap the overseas market,”
the executive said.
With improvement in the global credit markets and narrowing
of spreads, the Reserve Bank of India (RBI) decided today
to reintroduce the ceiling on interest rates that Indian
companies pay for external commercial borrowing.
The norms that take effect from January 2010, would permit
Indian companies to raise debt for three to five years by
paying up to 300 basis points above the London Inter-bank
Offered Rate (LIBOR). Those using the ECB window to raise
ECB-Bfunds for over five years would be allowed to pay up
to 500 basis points over Libor, RBI said in a communication
this evening.
RBI had lifted the restriction on ECBs in January, following
intensification of the global financial crisis after Lehman Brothers collapsed.
RBI also decided today to shut the special window that allowed
companies to buy back foreign currency convertible bonds to
reduce debt burden at the height of the global financial crisis.
The reintroduction of the cost ceiling and withdrawal of the
FCCB buyback facility are the latest in a series of rollbacks
RBI has introduced since the economic environment improved.
In late October, the central bank had decided to revert to
a statutory liquidity ratio of 25 per cent for Indian banks.
While the overall direction was to signal a check on excessive
inflows, RBI has eased ECB norms for telecom companies and
infrastructure-focused, non-banking finance companies.
In addition, companies engaged in the development of
integrated townships have been given another 12 months
(up to December 2010) to make use of the simplified norms
announced last year.
The simpler norms for telecom companies were an extension of
the October 2008 decision, when operators were allowed to use
ECBs to obtain 3G licenses. Now, they have been permitted to
use the route for payment of spectrum allocation, too.
A senior executive at a leading foreign bank said RBI was
signalling, through today’s moves, to check excessive flow
of capital into the country. “The high capital flows through
ECBs, FCCB and portfolio investment have pushed up the value
of the rupee against the US dollar. Another message is that
only high-quality companies should tap the overseas market,”
the executive said.
RBI is keeping a Vigil on Capital Inflows
13 December 2009
The Reserve Bank of India (RBI) allayed concerns about
capital inflows building an asset bubble and said it
is keeping a vigil on these.
“If there is too much liquidity, it has the potential
for asset price build-up,” RBI Governor D Subbarao said.
However, “every asset price build-up need not necessarily
result in a bubble”, he told reporters after a meeting of
RBI’s central board of directors here.
Subbarao said that capital inflows were in line with the
country’s requirement. The surge in capital Capital
Inflowflows was not like as what happened between 2006-08,
he said, adding “If and when there is excess of capital flows,
we will have to respond to that situation.”
Subbarao said it was not possible at this point of time to
speculate on what if anything the apex bank would do to contain
the quantum of capital inflows.
The RBI yesterday tightened the guidelines for corporates
raising resources from external commercial borrowings.
Subbarao said corporates were now able to raise resources
from non-debt sources. On loan growth, Subbarao said that
credit offtake would grow. He said non-food credit demand
had grown by 10.4 per cent.
On the ECB guidelines, Deputy Governor Shyamala Gopinath
said these were relaxed during the time of economic crisis.
“Spreads had gone up at that point of time.” But with things
coming back to normal, the spreads had now narrowed.
“So we have reverted to what was there prior to the relaxation,”
Gopinath said.
The Reserve Bank of India (RBI) allayed concerns about
capital inflows building an asset bubble and said it
is keeping a vigil on these.
“If there is too much liquidity, it has the potential
for asset price build-up,” RBI Governor D Subbarao said.
However, “every asset price build-up need not necessarily
result in a bubble”, he told reporters after a meeting of
RBI’s central board of directors here.
Subbarao said that capital inflows were in line with the
country’s requirement. The surge in capital Capital
Inflowflows was not like as what happened between 2006-08,
he said, adding “If and when there is excess of capital flows,
we will have to respond to that situation.”
Subbarao said it was not possible at this point of time to
speculate on what if anything the apex bank would do to contain
the quantum of capital inflows.
The RBI yesterday tightened the guidelines for corporates
raising resources from external commercial borrowings.
Subbarao said corporates were now able to raise resources
from non-debt sources. On loan growth, Subbarao said that
credit offtake would grow. He said non-food credit demand
had grown by 10.4 per cent.
On the ECB guidelines, Deputy Governor Shyamala Gopinath
said these were relaxed during the time of economic crisis.
“Spreads had gone up at that point of time.” But with things
coming back to normal, the spreads had now narrowed.
“So we have reverted to what was there prior to the relaxation,”
Gopinath said.
RBI Circular on KYC Norms, AML Standards and Combating of Financing of Terrorism
Dec 13, 2009 RBI
RBI/2009-10/253 – December 10, 2009
RPCD.CO RRB.No 6557/03.05.28-A/2009-10
Know Your Customer (KYC) Norms/Anti-Money Laundering (AML)
Standards/Combating of Financing of Terrorism (CFT)
Please refer to our letter RPCD.CO.RRB.No.5451/03.05.28-A/2009-10 dated
November 16, 2009 on risks arising from the deficiencies in AML/CFT
regime of Iran,Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe.
2. Financial Action Task Force (FATF) has issued a further Statement
dated October 16, 2009 on the subject (copy enclosed).
3. Regional Rural Banks are accordingly advised to take into account,
risks arising from the deficiencies in AML/CFT regime of Iran,
Uzbekistan, Pakistan, Turkmenistan and Sao Tome and Principe.
4. Please advise the Principal Officer of your bank to acknowledge
receipt of this circular letter to our Regional office concerned.
Yours faithfully,
(A.K.Pandey)
General Manager
RBI/2009-10/253 – December 10, 2009
RPCD.CO RRB.No 6557/03.05.28-A/2009-10
Know Your Customer (KYC) Norms/Anti-Money Laundering (AML)
Standards/Combating of Financing of Terrorism (CFT)
Please refer to our letter RPCD.CO.RRB.No.5451/03.05.28-A/2009-10 dated
November 16, 2009 on risks arising from the deficiencies in AML/CFT
regime of Iran,Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe.
2. Financial Action Task Force (FATF) has issued a further Statement
dated October 16, 2009 on the subject (copy enclosed).
3. Regional Rural Banks are accordingly advised to take into account,
risks arising from the deficiencies in AML/CFT regime of Iran,
Uzbekistan, Pakistan, Turkmenistan and Sao Tome and Principe.
4. Please advise the Principal Officer of your bank to acknowledge
receipt of this circular letter to our Regional office concerned.
Yours faithfully,
(A.K.Pandey)
General Manager
Government steps forward to support public sector banks to merge
| 14-Dec-2009 |
| |
| Indian Finance Minister Pranab Mukherjee stated that Government will support public sector banks to merge, provided they fulfilled RBI and SEBI (Securities and Exchange Board of India) guidelines. “If someone decides to merge, if we see it is in conformity with our policy and if we find that parameters are being followed as per the SEBI and RBI guidelines”, then government would play a “supportive role”, he said in reply to a calling attention in the Lok Sabha. “The current policy of the government on consolidation leaves the initiative for consolidation to come from the management of the banks themselves, with the government playing a supportive role as the common shareholder,” he said, asserting that no directive on consolidation was being issued by the government or the RBI. The boards of the banks have to take a decision in this regard “based on the synergy levels of merging or consolidating entities”, he said. The attention motion was moved by CPI leader Gurudas Dasgupta who asked whether the government had taken any initiative “overtly or covertly” to merge various public sector banks resulting in “discontent” amongst the bank employees. Dasgupta gave the example of the move for merger of State Bank of India and State Bank of Indore. He also said the move was being opposed by the Madhya Pradesh government. He pointed out that there was no government interference in the normal day-to-day financial and commercial activities of the state-owned banks, he said, “We are giving them managerial autonomy. We cannot give them a directive that doesn’t merge.” Mukherjee said consolidation was a “continuous process” as mergers had occurred during “every regime”. Mentioning that the banking system had “undergone major changes” since nationalization, he said the State Banks of Travancore-Cochin, Bikaner and Saurashtra were doing a “good job” and were being optimistic to do better. Dasgupta said mergers would not only lead to monopoly and lower competition in the banking sector, it would also lead to dropping access to banking for the greater part of people. Source: Live Mint |
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