Fully cooperating with probe agency, says HDFC Bank

The Finance Ministry has asked all public sector undertaking banks to review their internal risk management process to prevent recurrence of frauds such as around Rs 6,000-crore (Rs 60-billion) black cash remittance scam involving Bank of Baroda. Yesterday, the Enforcement Directorate reported yet another trade-based money laundering case worth over Rs 550 crore perpetrated by allegedly using banking channels of nine major national and worldwide banks, with illegal remittances being sent to Hong Kong and China. On Tuesday, CBI and the Enforcement Directorate arrested six persons, including two officials of a BoB branch here, in connection with alleged illegal remittances to Hong Kong through the bank.

Investigations have revealed that various modules, comprising of unscrupulous exporters, middlemen and certain bank employees, had been running this forex racket for close to 10 years.

When contacted, none of the banks wanted to comment on the issue on the grounds that they have not received any official communication yet.

The lenders are Oriental Bank of Commerce, ING Vysya Bank (acquired by Kotak Mahindra Bank Ltd in April), ICICI Bank Ltd, Kotak Mahindra Bank Ltd, IndusInd Bank Ltd, Dhanlaxmi Bank, Yes Bank and DCB Bank. The private banks are being investigated for their role in facilitating the alleged money laundering activities. ED arrested arrested Kamal Kalra, working with the foreign exchange division of HDFC bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal after marathon questioning at its office here. It is alleged that Rs 6,172 crore black money was remitted from Bank of Baroda to Hong Kong, which was passed off as payments for non-existent imports like cashew, pulses and rice.

However, during the investigation the Ed also found that against the imports, which in reality have never taken place, Jain and his associates were involved in illegally remitting funds out of India.

“Otherwise, if they are not pursued quickly and pursued to their logical conclusion, it creates an atmosphere of impurity, which then breeds more such practices”, Rajan told reporters after an RBI board meeting in Aizwal.