There is sufficient evidence where bank relationship managers emerge out of clients’ residences with suitcases full of currency notes counted on the bank’s notes counting machines. What more evidence is the RBI waiting for?
Reserve Bank of India (RBI) deputy governor Dr KC Chakrabarty’s bland statement yesterday in seeking to downplay the sensational 14th March exposé by the online magazine Cobrapost on the sidelines of a bankers event on “Risk based Supervision”, seems to be the only official reaction from the banking regulator.
The deputy governor seems to be convinced. He said, “No scam has happened... Allegations don’t mean that KYC norms have been flouted... If KYC is made more stringent then the opening of bank accounts for the finally excluded may become tough... Allegations do not mean flouting norms. There is not a single transaction (of money laundering as alleged by the exposé)...These are transactional issues that have nothing to do with money laundering (!)... I am not saying that there is no problem. I know there is a problem in the system (thank God for conceding!)... RBI’s Financial Statement Reports highlight serious concerns over bank branches selling gold coins, mutual fund instruments, and insurance. RBI has undertaken a thematic (whatever this means?) studies of banks that are active in selling gold coins and wealth management products… We cannot take action on allegations. We go by evidence.”
Come on Mr deputy governor, what more hard evidence do you want other than the unedited footage of video tapes? Surely you are is not waiting for another Harshad Mehta or CR Bansali types to put on actual laundering acts to present you, the regulator, with harder evidence of bank relationship managers emerging out of clients’ residences with suitcases full of currency notes counted on the bank’s notes counting machines!
For the kind information of the RBI, the Mumbai-based daily Free Press Journal in a boxed article, in its business page, has listed some of the most common the modus operandi practiced for money laundering:
a. Accepting huge amounts of cash to invest in insurance products and gold.
b. Opening accounts to route cash into various investment schemes.
c. Doing it even without the mandatory PAN card or adhering to KYC norms.
d. Making use of benami accounts to facilitate the conversion.
e. Splitting money into smaller tranches to circumvent detection.
f. Using of accounts of other unsuspecting customers to channelize black money into the system with an incentive percentage of fees.
g. Investing black money in multiple instruments in different names, not necessarily drawn from the family.
h. Allotting of safe deposit lockers, including special large sized ones, for parking crores of illegitimate large value currency notes.
i. Relationship managers personally calling on the residences to collect cash bringing along note counting machines to take the deal forward.
j. Encouraging the misuse of Income Tax Form 60 to state that they are not tax assesses and/or do not have PANs.
k. Helping clients route black money parked abroad through NRE/NRO accounts or through other means other than normal banking channels.
If anyone in the banking regulator claims not to know any or all of the above, surely s/he is not fit to be to occupy the position!
(Nagesh Kini is a Mumbai-based chartered account-turned alert-concerned citizen activist. He was for long a RBI panelled bank statutory auditor and extensively practiced FERA/FEMA.)
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Heard of the saying? Chor Chor Mausere Bhai...
Money laundering takes several different forms although most methods can be categorized into one of a few types. These include "bank methods, smurfing [also known as structuring], currency exchanges, and double-invoicing".[3]
Structuring: Often known as "smurfing", is a method of placement by which cash is broken into smaller deposits of money, used to defeat suspicion of money laundering and to avoid anti-money laundering reporting requirements. A sub-component of this is to use smaller amounts of cash to purchase bearer instruments, such as money orders, and then ultimately deposit those, again in small amounts.[4]
Bulk cash smuggling: Physically smuggling cash to another jurisdiction, where it will be deposited in a financial institution, such as an offshore bank, with greater bank secrecy or less rigorous money laundering enforcement.[5].
I think the word laundry means to clean and as far as my knowledge goes conversion of black money to white comes under this. It is not necessarily to be out of Criminal activities. Someone, please send a dictionary to the Bengali Babu
The Governor Dr. Subbarao, rightly pointed our yesterday "I cannot, at this time, say or make broad, sweeping statements that there are no transactions taking place at all." Will Dr. Chakrabarty get his message straight and clear?
Questions you have raised reflects your intensive 'digging' done to at least see the tip of the ice-berg. Short span of 19 yrs service was with LI - Alternate Channel.
I was fortunate that Piramal kicked out entire kerala...big talking leaders were the first ones to go with the begging bowl
Had I been in pharma, maybe i would be comfortable but, that's a sick world - different and info not useful for a common man, but yes, for Doctors. Its the LI sector which taught me "The Power of Now"...by hook or by crook just get the job done..no matter what or PIP...
RM/SM/BM and all treated like dogs by their bosses, who are In-capable of sitting before you.
These RM's are guilty of obeying their bosses for fear of losing their job.its the top management of respective banks who set a culture and environment of mistrust & non transparent aura which breads to office politics & Kerala CRAB Mentality. RBI can never be given a clean chit..may be taking up wavering steps or placing the bank heads on notice.
Two points mentioned by you:
1. Using LI or other methods to wash it clean...spot on. IRDA guidelines of KYC must for any amount above 49,999/=...10 Lacs cash, client had only Voters ID but by evening its done (IDBI Bank was not in CobraList) As per my info Copy of 6 mnths bank report, PAN, Standard Age proof and address proof are essential to login this policy...this person had only voters ID..How?
2. Providing lockers in banks itself - I am not sure but heard this lot of times...There are many types of a/c in all the banks..Saving, Current, Company A/c...etc...what I'm interested to know is are there something called Secondary a/c which does not reflect in the bank statement...?
Roamers and myths are turning into realities..
What I've mentioned is true. Beyond this, I fear for my family.
2)Aditya Puri's comments saying they wl take strict action against "loose talk" of their employees is laughable.Employees have no guts or rights to accept such large black money is it is not instructed to them by seniors.
when banks are run by marketing principles applicable to FMCG sector this is what you will get.
Relationship managers area joke. They are fresh MBAs and Pvt banks don't train them in banking but train only in soft skills. Anyone who has no knowledge of basics will mis sell because that is what soft skill trainers have trained him for!