Fraud Alert: Bogus Bank Running 9 Branches; How Not To Become a Mule in Money Matters
Despite all the ups and downs, banking still remains one of the most trustworthy businesses in India. No wonder, a 'rare' genius with entrepreneurial instincts not only opened a bank but ran nine branches in Tamil Nadu without obtaining any licence from the Reserve Bank of India (RBI). This reminds me of another case where an entire illegal branch was opened and remained in operation for three months in the name of the State Bank of India (SBI) at Panruti in the same state.
 
While talking about banking, many incidents are coming to light where many Indian citizens, who have allowed their bank accounts and personal documents to be used by Chinese loan app operators for some money, have been arrested by the police. But more about it later.
 
Bogus Bank with 9 Branches
 
The bank fraud investigation wing of the crime branch of Tamil Nadu police has launched a manhunt for the accomplices of a 44-year-old conman, Chandrabose Vedachalam, who opened a bank without a licence and defrauded several people.
 
According to IANS, Chandrabose set up 'Rural and Agricultural Farmers Cooperative Bank' (RAFC Bank) without obtaining any licence from RBI. He opened nine branches in Madurai, Virudachalam, Kallakurichi, Namakkal, Perambalur, Erode, and Salem and two branches in Chennai city.
 
After noticing the bogus bank branch, RBI filed a complaint with the police. TN police have arrested Chandrabose, the mastermind of this fake bank, and recovered a luxury car and Rs56 lakh cash from him.
 
Chennai city police commissioner Shankar Jiwal told media persons that Chandrabose fabricated a certificate, purportedly issued by RBI, and opened branches of this fake bank in nine places. He also recruited bank staff by collecting Rs2 lakh to Rs7 lakh from the job aspirants. Through the staff, he enrolled 2,000 members across the state and collected Rs700 from each as a membership fee. 
 
Mr Jiwal says Chandrabose obtained prepaid cards from ICICI Bank in the name of the RAFC Society, issued the cards with an Rs500 balance to its enrolled members and activated them by submitting the know-your-customer (KYC) documents of the members to the ICICI Bank.
 
"...the 'bank' was operating as a regular bank by collecting deposits as well as providing loans. Higher interest rates were offered to the depositors, and loans were provided easily to the customers," TN police says.
 
Rural and Agricultural Farmers Cooperative Bank even has a website giving generic information about banking services. 
 
Often, we at Moneylife and Moneylife Foundation are asked about the best and safest bank to bank with. Our advice is to prefer public sector banks (PSBs) for the safety of your money and go to a private bank if you expect better services. However, there is no guarantee of better service or treatment, even from a private bank. A few branches or bank officials may be the exception, but that proves the point. 
 
What is more important for anyone who wants to open an account in a bank is to know if the bank is operating with a valid banking licence. I would have said trust PSBs, but then SBI's fake branch at Panruti raises more doubt on the genuineness of even these banks. 
 
The first step is to go to the RBI website and find out if the bank in which you want to open an account is listed on their website. RBI has provided a list of scheduled commercial banks, including 12 PSBs, 21 private banks, 12 small finance banks (SFBs), four payments banks, 43 regional rural banks (RRBs) and 45 foreign banks allowed to operate as bank in India.
 
An important point to remember is that any patpedhi or credit society is not a bank and does not have a banking licence issued by RBI. These patpedhis and credit societies operate with a permit from the registrar of cooperative societies from the state. Money invested in such patpedis or credit societies is always at risk.
 
To know more about a new bank or branch opened in your area, you can contact RBI's regional offices at 31 locations across the country (https://rbi.org.in/Scripts/helpdesk.aspx).
 
How Not To Become a Mule in Money Matters
 
Earlier this week, the intelligence fusion & strategic operations (IFSO) unit of delhi police's special cell arrested two persons, including a Chinese national, for extorting money from people through instant loan applications. In August, the IFSO unit busted various modules of instant loan applications having a Chinese connection and arrested 22 people for allegedly siphoning off Rs500 crore to China by the hawala route or by investing in crypto-currency.
 
Last month, the directorate of enforcement (ED) seized Rs78 crore lying in various merchant IDs and bank accounts, taking the total seizure, in this case, to Rs95 crore. In a release, ED says, "The modus operandi of these entities is using forged documents of Indians and making these Indians dummy directors of those entities and generating proceeds of crime. It has come to notice that the said entities were doing their suspected or illegal business through various merchant IDs and accounts held with payment gateways and banks."
 
In both these cases, the common feature is Indians were arrested. As ED had mentioned, many of these people may have been mules and would have allowed the use of their bank accounts and documents for a few rupees. In many cases, cyber fraudsters use other people's bank accounts or payment gateway IDs to siphon money garnered in the fraud. The mules are either clueless about how their bank account or documents would be used or prefer to keep quiet after accepting some payment from the fraudsters. They only realise their mistake when the police knock on their doors and understand the gravity of the situation after getting arrested. 
 
The important lesson from this is never, ever allow anyone to use your bank account or payment account like a unified payment interface (UPI) ID or share copies of your documents like Aadhaar, PAN card, residence proof and photo ID. 
 
In the first case, the main people behind the Chinese loan apps were found to be operating from China with support from a few in India. Their local people procured bank accounts or merchant and payment IDs to collect and transfer money obtained from borrowers. Police arrested those present on the ground and are searching for others who may be helping the fraudsters collect money or allowing them to use their bank accounts. 
 
Be Careful, and Be Safe!
 
Do report cybercrimes to the National Cyber Crime Reporting Portal http://cybercrime.gov.in or call the toll-free National Helpline number, 1930. To follow on social media: Twitter (@Cyberdost), Facebook (CyberDostI4C), Instagram (cyberdostl4C), Telegram (cyberdosti4c).
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