Citibank fraud under RBI scanner too

Realising the magnitude of the Citibank fraud estimated at Rs 300 crore, the Reserve Bank of India today said it will go into the entire gamut of the scam, even as it is being looked into by market regulator Sebi and the police.

“RBI is investigating the matter (Citi Bank fraud),” a key Reserve Bank source said.

Later, RBI Deputy Governor K C Chakrabarty said: “Every fraud is looked by regulator, where is the question that the Citibank fraud will not be looked at.”

He was speaking to reporters on the sidelines of an event here.

As such, market regulator Sebi is investigating the fraud in Citi’s Gurgaon branch, which saw diversion of depositors’ funds in stock markets.

No regulatory failure in Citibank fraud: Montek

The Planning Commission does not see the Rs 300-crore Citibank swindling as a regulatory failure and said fraud cannot be ruled out in any mechanism.

“I don’t see this (Citibank fraud) as a regulatory failure ,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters.

“Individual problems always crop up. But I don’t think that fraud can ever be ruled out. When it happens, you need to move quickly and take corrective action,” Ahluwalia said on the sidelines of a Skoch summit here.

The fraud at the Citibank’s Gurgaon branch, involving diversion of depositors money into the stock market, was uncovered last week.

Several high networth individuals (HNIs), including promoters of Hero Group, were lured by Citibank’s Relationship Manager Shivraj Puri, the main accused in the scam, into investing funds on promise of high returns.

‘2 more employees identified in Citibank fraud case’

Hero Corporate Service today said it has identified two more employees who could have colluded with its former Associate Vice-President Sanjay Gupta and Citibank employees in the Rs 300-crore fraud.

“Following an initial internal enquiry, two employees — Ganpat Singh and Gaurav Jain– working in the accounts department have also been identified to have been in possible collusion with Sanjay Gupta and Citibank employees,” Hero Corporate Service said in statement.

They have been sent on leave with immediate effect by the company, it added.

“This is in addition to the suspension of Gupta by the company. Further appropriate action will be taken after the final outcome of the enquiry,” it said

Earlier this week, Gupta was remanded to a five-day police custody in connection with the Citibank fraud case for allegedly investing about Rs 250 crore belonging to promoters of the Hero group companies.

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