Story of Demat Scam 1,00,000 Bogus Demat A/c, Bank A/c, Cornering Small Investors

1
Story of Demat Scam1,00,000 Bogus Demat A/c,
Bank A/c,Cornering Small Investors
PortionCovering 53 IPOs 5 Crore Shares

• Presentation by
• Dr. KIRIT SOMAIYA
• Investors Grievances Forum

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IPO-DEMAT SCAM STORY OF SCAM SHAME
21st Century India is moving in the direction of
becoming a Developed Country. Importance on the
growth, Government investment in infrastructure
from the year 2000 has changed the picture of
Indian economy. Rs 1,00,000 crore Government
spending on the core and infrastructure
industries during 2001-03, has created a boom in
the Indian Economy. Indian industries have
gained self-confidence to compete with the world.
  The boom in the economy resulted in the boom
in finance industry and that of Capital Market.
It is unique in India that every bull run in the
Capital Market has got supplemented by a scam.
Harshad Mehta Scam 1992, the scam of CRB-NBFC,
the plantation companies and the Ketan Parekh
Scam.   Industries and finance sector always
tried to tap the primary market during a boom.
Mobilize the financial resources through Public
Issues and IPOs. In 2004-05, more than Rs.24,000
crores have been mobilized from the primary
market through Public Issues and IPOs.   It is
the sad part of the Indian Capital Market that
every IPO boom has a scam. It was during
1986-88, the primary market momentum had a
mini-scam of mini-steel plants and mini-cement
plant public issues. These companies tapped the
market, fooled the Small Investors, collected
hundreds of crores of Rupees, diverted the funds.
Small Investor was the loser.   After the
Harshad Mehta pick, once again the primary market
got a momentum during 1995 to 1997 which resulted
into the vanishing companies scam. Almost 1000
companies raised funds through Public Issues and
got vanished.   During the Ketan Parekh Scam,
several companies changed their names from NBFC,
finance companies to Infotech companies. Tapped
the market. Several companies also created the
hype and got benefited by higher premium.Small
Investors the looser.
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The IPO-Demat Scam of 2005 is in a way repetition
of history. It is economic growth, booming
economy, momentum to Capital Market and once
again scamsters. Same mentality has destroyed the
whole of the Indian finance/capital market
regulatory network. It is just like a virus.
Which has demolished, corrupted the banking
system, depository system, Stock Exchanges,SRO,s
Rregulatory network. The failure of surveillance
and vigilance at every level from the Finance
Ministry, RBI, SEBI, NSDL, CDSL, NSE, BSE, Banks,
Depositories. In a single day, 10,000 bank
accounts were being opened, nobody questioned.
Same day 10,000s Demat accounts were opened,
nobody gets suspicious.   Is it possible? It
is connivance. The scamsters, the syndicate
corrupted the whole system. The Demat scam is
the connivance of so-called Panchals, the broker,
the investor, the banker and the DP. All came
together to master-mind the scam, corrupted 53
Public Issues, siphoned off more than 5 crores
shares of Small Investors.   It is a tragedy on
the part of the Indian regulators that the scam
is going on since August 2004. Banks finance
so-called Public Issue applications without even
asking them to open a bank account. It is Bharat
Overseas Bank, Citibank gave IPO finance of
hundreds of crores of Rupees to a single person
such as Roopalben-Syndicate in the name of tens
of thousands of fictitious applicants/names.   Kar
vy, the Depository, processed tens of thousands
of applications, allotted them shares without
even receiving applications.Investors Grievances
Forum is committed to protect the interest of
Small Investors. The Small Investors demands
justice. Losses incurred by the Small Investors
due to the siphoning off of their shares by these
scamsters be recovered from them. Be returned to
those Small Investors/applicants. Five times
penalties be levied. This may be deposited into
the Investors Education and Protection
Fund.   We want criminal action against the
scamsters. Section 68A of the Companies Act is
very clear and specific. To apply in Public
Issues in a fictitious name is a crime,
punishable with imprisonment up to 5 years. SEBI
and the Government has to initiate criminal
action.   Here is a presentation on the Demat
Scam. We appeal to all to teach a lesson to the
scamster. Let us show the International
Regulators, India, Indian Government, Indian
Regulators also act like the Regulators of the
Developed Countries. Take the issue to the
logical end and get justice to Small Investors.
- KIRIT SOMAIYA
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Story of Greed, Failure of System

• Started in August 2004
• Loot Cornering Small Investors Quota by
  Syndicate of Broker, Investor, Bank, DP
• Failure of Surveilance Vigilance of Regulators
• 53 Ipos 5 crore Shares, 1 Lac Bogus Demat a/c
• The Roopalben, Sungandh Investments, Zaveris,
  Budhwanis Sakserias, along with the
  Broker-Investors, with support of Banker DP run
  the Show-Scam for 18 months.

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Story of Panchals

• Story of Roopalben, Sugandh Investments, Zaveri,
  Budhwanis, Sakserias
• Story of Bharat Overseas Bank, City Bank, Indian
  Overseas Banks.
• Story of Karvy Registrar, DP, Stock Broker
• Failure of SEBI, NSDL, CDSL, RBI,BSE
• Connivance of all of te above made 43,982
  applications in fictitious names in IDFC Public
  Issue. Got alloted 1,17,05,872 shares. Roopalben
  Budhwani were allowed to open 5,000 Bogus Demat
  A/c on the last day of IDFC issue by Karvy
  Bharat Overseas Bank.

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Mastermind to corner Small Investors Share

• The entire gameplan, craftily designed,
• masterminded and executed by a coterie of
  operators acting in concert
• tout ensemble through the mechanism of front
  entities of name-lenders
• clear abuse of the very process of IPO, meant to
  shore up the participation of small investors.
• The syndicate shared the Share Allotment
  Benefit Investor to get 50 of Bogus Allotment
  Panchals Broker, the Shell Investment Cos
  remaining 50. Karvy put added further
  thousands application.

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SEBI Order on IDFC

• Thousands of applications in fictitious / benami
  names.
• IPO applicants merely name-lenders or
  non-existent
• These Bogus allottees transferred shares to
  Panchals, Budhwanis the Syndicate
• Transfer of shares before listing
• Sold shares on the first day of listing
• Windfall gain
• Elbowing out the genuine retail investors
• Bank in depositories allowed syndicate to open
  benami/ fictitious demat and bank accounts

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IPO of IDFC

• IPO of IDFC opened on July 15, 2005 and closed on
  July 22, 2005.
• Basis of allotment finalized on Aug 04, 2005.
• Shares credited to IPO allottees on August 05/06,
  2005.
• Shares got listed on the Stock Exchanges on
  August 12, 2005.
• Yes, before listing the Scamsters use to transfer
  shares to the Beneficiaries accounts. Mutual
  understanding. Unsigned Moll.

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Small Investors Portion/ Quota

• IDFC came out with public issue of 403,600,000
  equity shares of Rs. 10 each for cash at a price
  of Rs. 34 per equity share .
• 141,260,000 equity shares were to be offered to
  Small Individual Investors (defined as Individual
  Bidders who bid for equity shares for an amount
  less than or equal to Rs. 1,00,000 as per
  prospectus).

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Transactions in IDFC Shares by Roopalben Panchal
Associates

• Roopalben have their demat a/c with Karvy Stock
  Broking Ltd.
• Panchals also have thousands of
  Fictitious-Bogus-Benami Demat Accounts Banks
  A/C at the same address
• 34 Ketan Tower, Camp Road, Shahibaugh,
  Ahmedabad-380004.
• 402-403, Shashwat, Opp. Gujarat College,
  Ellisbridge, Ahmedabad ,
• bank accounts with Bharat Overseas Bank, C G
  Road, Ahmedabad.

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Roopalben Panchal Others

• Roopalben received 39,43,184 shares from 14,807
  demat a/cs on August 11
• Purshottam Budhwani received 2,98,412 shares from
  1122 demat a/cs on 8 August
• Roopalben also received 32,61,426 shares from
  12,257 dematerialized a/c on 8 Aug
• Sugandh Investment Pvt. Ltd. received 27,08,944
  share- 10181 demat a/c on 8 Aug

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Bogus Demat a/c of Panchals Others in IDFC
Ms. Roopalben Panchal 27064
Sugandh Estates and Investments Pvt. Ltd. 10181
Shri Purshottam Ghanshyam Budhwani 4748
Shri Manojdev Seksaria 1989
TOTAL 43982
Source SEBI Order on IDFC Demat Scam
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Roopalben 12,257demat a/c-NSDL

• opened in 21 various batches on 21 diff. dates

Sr.No. Demat A/c Opening No. of Accounts
1 Upto 15.08.04 5990
2 16.08.04 2729
3 17.08.04 195
4 18.08.04 59
5 19.07.05 1001
6 20.07.05 1525
7 21.07.05 758
Total 12257
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Sugandh Invest Demat A/C opening
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Budhwani demat a/c opening
Sr.No. Demat A/c Opening No. of Accounts
1 Upto 15.08.04 670
2 13.10.04 424
3 10.06.05 40
4 14.06.05 18
5 15.06.05 142
6 22.07.05 2822
Total 12257
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Budhwanis Banks A/Cs
How a person is allowed to open so many accounts
in the same Branch. For a Small Investor, Bank
asks so many documents and for Budhwanis, Khulja
Sim Sim, Red carpet for Budhwanis Panchals.
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Modus Operandi
Yes, this is the Syndicate. How they share to
Benefit - Shares
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Office of Dummy Fictitious Investment Co. 25/A
68 Gate No 6, Malwani, Malad (W), Mumbai 95
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Kirit Somaiya visited the Benami Co. at Malawni
Slum Area with the slum dwellers
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Modus Opurendy-2
The Syndicate of Panchals, Broker Bogus
Shell Co. Investors
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Modus Opurendi for Firm Allotment

• Out of the above 2,54,828 applicants that had
  applied in the 1400 shares category and had
  received allotment in the IPO of IDFC, as many as
  43,982 applicants representing 17.26 of the
  applicants of Roopalben, Sugandh, Budhwani and
  Seksaria appear to be fictitious
• Every applicant got allotment
• Also, the above suspected fictitious applicants
  had received IPO allotment of about 1,17,05,872
  shares representing about 8.29 of the retail
  portion of 14,12,60,000 shares of the
• They apply for such a lot so every application
  will have allotment

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Dealing by 5 entity received share from Roopalben
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Benami Applicant -The Bogus address 39, Kailash
Niwas 2, Mehta Road, Ghatkopar (E), Mumbai 77
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Roopalben-Fairy Tale

• How an individual can open 27,064 A/C
• Can persuade all 27,064 to make off-market
  transfers to her demat account
• Immediately prior to the scheduled listing on the
  stock exchanges
• It is simply fairy-tallish.

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Syndicate

• Panchals, Budhawani, Zaveri,Sakseria
• Broker
• Investors- Shell Cos
• Karvy DP, Karvy-Registrar
• Bank Branch Managers Management

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Karvy the Culprit

• Milibhagat with Syndicate-Panchals
• No details of Bank a/c Refund mentioned in the
  Application forms
• Cheques issued with contineous serial numbers for
  thousands of aplicants
• Opened fictitious demat a/c
• Forms, details not available now
• Issued single refund cheque for thousands
• Of applicants
• Karvy the Registrar, DP, Stock Broker, thousands
  of forms incomplete, applicants not traceable.
  Applications processed allotted without
  receiving forms.

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Order of SEBI Action on IDFC

• Panchals,Investors,Syndicate Others directed
  not to buy, sell in the securities market,
  directly or indirectly
• NSDL and CDSL to ensure that the demate a/c which
  served as conduit for Roopalben, Sugandh,
  Budhwani and Seksaria are not utilized for
  manipulation of IPO allotment in future.
• SEBI is directed to conduct immediately
  inspection of Karvy-RTI

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SEBI Directives

• The following entities are directed not to buy,
  sell or deal in the securities market, directly
  or indirectly, till further directions
• i. Ms. Roopalben Nareshbhai Panchal
• ii. Sugandh Estates Investments P Ltd.
• iii. Shri Purshottam Ghanshyam Budhwani
• iv. Shri Manojdev Seksaria
• The following entities are directed not to buy,
  sell or deal in the shares of IDFC Ltd. and in
  other ensuing future IPOs, directly or
  indirectly, till further directions
• Zenet Software Ltd.
• Tauras Infosys Ltd.
• Rajan Vasudev Dapki
• Bhargav Ranchhodlal Panchal
• Jayantilal Jitmal
• Seer Finlease Pvt. Ltd.
• Excell Multitech Ltd.
• Devangi Dipakbhai Panchal
• Hasmukhlal N. Vora
• Welvet Financial Advisors Pvt. Ltd.
• Jayesh P Khandwala HUF
• Guatam N Jhaveri
• Shilpa Rajan Dapki

• Sujal Leasing Pvt. Ltd.
• Dushyant Natwarlal Dalal
• Puloma Dushyant Dalal
• Amadhi Investments Ltd.
• Ritaben R Thakkar
• Monal Y Thakkar
• Page 46 of 49
• Vinod Modha
• Kelan Atulbhai Doshi
• Jitendra Lalwani
• Lok Prakashan Ltd.
• Bahubali Shantilal Shah
• Smruti Shreyans Shah
• Shreyans Shantilal Shah
• Datamatics Telecom Ltd.
• Dharmesh Bhupendra M
• Biren Kantilal Shah
• Suresh Bhikha Vasava
• Javeri Gautambhai

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Bharat Overseas Bank

• Connivance or Negligence ?
• Extending IPO finance to fictitious/benami
  individuals
• Providing intra day funding of margin money to
  brokers
• Extended huge amounts to the group through these
  fictitious/benami individuals
• The internal control system has failed to arrest
  the above irregularities
• Collection of account payee cheques of various
  individuals who are not the customers
• Crediting the proceeds of the refund orders to
  accounts other than the accounts of the payees

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RBI Findings

• Imposed monetary penalties for violation of RBI
  regulations on Know Your Customer (KYC) norms
• Breach of prudent banking practices
• facilitating misuse of IPO finance to ineligible
  borrowers.
• Issued show cause notices
• RBI conclusion that violations were substantiated
  
• Accordingly the monetary penalties are imposed.

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Reserve Bank of India Order

• Penalty levied on Following Banks
• Bharat Overseas Bank Ltd.
• Indian Overseas Bank
• Vijaya Bank
• City Bank
• HDFC Bank Ltd.
• ICICI Bank Ltd.
• Standard Chartered Bank

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Scam-Yes Bank IPO

•  Issue opened on June 15, 2005
• Listed at BSE NSE July 12
• Roopalben Panchal transferred 9,31,600 shares to
  seven entities on July 11, i.e. prior to the
  listing
• In order to get an allotment of 9,31,600 shares
  Roopalben had to apply for crores of shares
• Involving many crores of rupees in application
  money
• Observed that Roopalben Panchals name in the
  list of applicants/ allotees only once

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Yes Bank Issue

• Public Issue _at_ Rs 45
• 1.75 Crores Shares Reserved for Small Investors
• Rupalben cornered sold 8,39,500 shares _at_ Rs
  61.40
• Rupalben Syndicate earned profit of Rs
  1,37,67,8000

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Gimmick of Roopalben in Yes Bank IPO

• 6,315 Bogus-fictitious applications, Demat A/cs,
  Bank A/cs
• Similar Addresses of Ahmedabad for Demat A/c
• On all applications similar address of Bharat
  Overseas Bank, Worli, Mumbai
• 9,47,250 shares allotment to these fictitious
  accounts

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Syndicate of Panchal-Investors

• Roopalben made off market transfers on 11.07.05
  to the following entities
• 1.      Seer Finlease P.Ltd. - 3,32,875 shares
• 2.      Excell Multitech Ltd. - 1,61,180 shares
• 3.      Devangi Dipakbhai Panchal - 2,20,000
  shares
• 4.      Zenet Software Ltd. - 92,855 shares
• 5.      Tauras Infosys Ltd. - 80,590 shares
• 6.      Rajan Vasudev Dapki - 44,100 shares

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Roopalben Investors

• Roopalben received funds from 8 entities
• Prior to the IPO of Yes Bank Ltd.
• Devangi Dipak Panchal, Rajan Dapki, Zenet
  Software Ltd., Excell Multitech Ltd., Taurus
  Infosys Ltd., Seer Finlease P Ltd., Barghav
  Panchal (HUF) and Jayantilal Jitmal
• She in turn transferred these funds to 6315
  entities who had utilized these funds for making
  applications in the IPO of YBL.

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Sugandh Investment Yes Bank

• 1315 Bogus applications
• Allotment of 1,97,250 shares
• Profit of Rs 32,26,492
• Modus-operandi similar to Rupalben

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Order of SEBI Action on Yes Bank

• Panchals Others directed not to buy, sell or
  deal in Yes Bank and other Companies Shares,
  ensuing IPOs, directly or indirectly
• NSDL is directed to ensure that the 6315 demate
  a/c of Roopalben and 1315 demate a/c of Sugandh
  not utilized for manipulation of IPO in future.
• NSDL is directed to undertake a comprehensive
  inspection of Karvy-DP
• NSDL and CDSL are advised to enhance their
  surveillance

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10,669 Bogus demat a/c opened on 16 Aug. 2004
Ms. Roopalben Panchal 6483
Sugandh Estates and Investments Pvt. Ltd. 4186
TOTAL 10,669
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Major Public issues 2003-05
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Major IPO Bogus Applications
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Criminal Action Demanded

• Criminal action against Panchals and others for
  opening bogus Demat and Bank Accounts.
• Companies Act is clear on this under Sub-section
  (1) of Section 68A
• Any person who
• a) Makes in a fictitious name an application to a
  Company for acquiring or subscribing for any
  shares therein, or
• b) Otherwise induces a Company to allot, or
  register any transfer of, shares therein to him,
  or any other person in a fictitious name, shall
  be punishable with imprisonment for a term which
  may extend to five years.
• As per Sec. 55A of Companies Act, provision of
  68A is to be administered by SEBI. In case of
  listed companies, Sec. 621 authorizes SEBI to
  file complaints for offences under the Companies
  Act.

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Karvy the Culprit

• All the major scamsters along with Karvy have
  looted the Small Investors.
• More than 95 bogus fictitious Demat accounts
  have been opened by Karvy DP.
• Karvy has accepted payment and also refunded the
  amount to the scamsters
• It is unearthed that Karvy was issuing single
  cheque to Panchals, Sugandh Investment for these
  benami, forged applications.
• The Syndicate of Karvy, Bharat Overseas Bank,
  investors, Panchals was transferring refunds
  belonging to thousands of bogus applicants with
  help of Electronic Clearing System directly in
  the bank accounts of Panchals Others

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Action on Karvy

• Thousands of dematerialized accounts being opened
  on the same day with the same branch and being
  introduced by the same bank should have alerted
  the DPs at the time of opening of the
  dematerialized accounts.
• However the fact that DPs failed to exercise even
  this basic due diligence gives rise to a
  suspicion that they have actively colluded with
  the perpetrators. It is a matter of serious
  concern that Karvy-DP has opened such apparently
  benami / fictitious accounts working out to over
  95 (42,056 nos) of the multiple dematerialized
  accounts in relation to IDFC IPO.

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Issue Raised by Parliamentarians

• Members of Parliament have taken this issue with
  Finance Minister
• Shri Dharmendra Pradhan, MP
• Shri Yeshawant Sinha
• Shri Vedprakash Goyal
• Shri Vallabhbhai Kathuria, MP
• Shri Suresh Waghmare, MP
• Shri Sanjay Talathi, MP
• Shri Satish T. Gao, MP
• Demanded protection of Small Investors Criminal
  Action

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IGF Demands

• IGF demanded full-fledged investigation the role
  played by Karvy - Karvy Registrar, Karvy Stock
  Broker, Karvy DP.
• IGF has also come to the conclusion that
  thousands of applications have been made without
  completing the formalities. In many cases,
  addresses are not available or application forms
  are also not available.
• IGF demands that till all the investigation is
  completed, all the activities of Karvy be
  suspended immediately.

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Action Demanded by IGF

• Action under Sec. 68A of Companies Act against
  the scamster.
• Anybody applies in an IPO in fictitious, bogus
  names is punishable for 5 years imprisonment.
• As per Sec. 55A of Companies Act, provision of
  Sec.68A is to be administered by SEBI in case of
  listed companies.
• As IGF has already demanded action by SEBI and
  NSDL, we would request you to ask Karvy to
  initiate criminal action.
• We once again insist that such action must be
  initiated by SEBI, NSDL for Karvy.

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IGF Representations to

• Hon. P.C. Gupta, Company Affairs Minister
• SEBI, Finance Ministry, RBI, NSDL CDSL, Stock
  Exchanges (BSE/NSE)
• Bharat Overseas Bank, Karvy,
• Home Minister, Gujarat Govt.
• Economic Offence Wing, Gujarat Police,
• Palton Road Police Station, Mumbai

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IGF Action Police Complaint at Palton Road
Police Station ,Mumbai
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IGF Action Police Complaint at Police
Headquarters- Gandhinagar, Gujarat
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RBI Findings Directives

• Bank a/c opened without Forms etc
• IPO financing given for Fictitious Applicants
• Broker-Investor a/c debited credited for
  fictitious applicants
• Partner in the Scam
• Complete audit Investigation of last 3 years
  IPO financing

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Reserve Bank of India action on
Banks January 13, 2006    Bharat Overseas Bank,
Vijaya Bank and certain other banks. The detailed
scrutiny by the Reserve Bank revealed that the
funding of IPOs through multiple accounts was
being followed by Bharat Overseas Bank and this
covered funding of several other IPOs,
Infrastructure Development Finance Company (IDFC)
being one of them.     Misuse of IPO finance-
Penal action taken   The Reserve Bank of India in
exercise of powers vested in it under the
provisions of Section 47 A (1)(b) of the Banking
Regulation Act, 1949 imposed monetary penalties
on seven scheduled commercial banks for violation
of RBI regulations on Know Your Customer (KYC)
norms, for breach of prudent banking practices
and facilitating misuse of IPO finance to
ineligible borrowers.   The RBI had issued show
cause notices to all these banks. In response
thereto banks had submitted their written
responses and the CEOs had also sought personal
hearing with the RBI, which was granted. On
careful examination of banks' submission, the RBI
has come to a conclusive decision that the
aforesaid violations were substantiated and
accordingly the monetary penalties are
imposed.   Bharat Overseas
Bank Ltd.,    the bank had committed the
following irregularities   (i) Extending IPO
finance to fictitious/benami individuals without
appropriate due diligence to establish their
identity or existence.   (ii) Apart from
providing intra day funding of margin money to
brokers, the bank had extended huge amounts to a
group of accounts through these fictitious/benami
individuals in violation of RBI directive on
limits on funding of IPOs, (which specified,
inter-alia, a limit of Rs.10 lakh per
individual).   (iii) The internal control system
has failed to arrest the above irregularities. It
also did not act upon the alerts
emanated from the internal
audit.   (iv) Collection of account payee cheques
of various individuals who are not the customers
of the bank, besides crediting the proceeds of
the refund orders to accounts other than the
accounts of the payees.
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3. In view of the above, the Reserve Bank of
India has imposed a penalty of Rs.20.00 lakh
(Rupees twenty lakh only) on the bank.    
Citi Bank   After examining the
bank's reply and your oral submission on January
21, 2006,   The Reserve Bank of India held,
inter-alia, that the bank had violated RBI
guidelines/directives/instructions 1.relating to
monitoring of suspicious transactions, adherence
to KYC norms 2. Issue of large number of cheque
leaves not in consonance with the status of the
account holder.  In view of the above, the
Reserve Bank of India has imposed a penalty of
Rs.5.00 lakh   HDFC
Bank Ltd.   guidelines/directives/instructions
  1.relating to opening of deposit accounts  2.
failure of monitoring of transactions for
adherence to KYC norms and failure of internal
controls.  In view of the above, the Reserve Bank
of India has imposed a penalty of Rs.5.00 lakh
(Rupees five lakh only) on the bank.  
ICICI Bank Ltd.   the bank had
violated RBI guidelines/directives/instructions
relating to   opening of accounts  monitoring of
transactions for adherence to KYC norms,  there
was failure of internal control and  acceptance
of account payee cheques across the counter
without proper authorization.   In view of the
above, the Reserve Bank of India has imposed a
penalty of Rs.5.00 lakh (Rupees five lakh only)
on the bank.
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Indian Overseas
Bank,   the bank had violated RBI guidelines /
directives/instructions in regard to the
following aspects.   a) Opening multiple accounts
without adhering to KYC norms.  b) Facilitating
manipulation of IPO process by certain group of
individuals by extending IPO finance to various
fictitious individuals.  c) Failing to monitor
the unusual and suspicious transactions in the
account  the failure of internal controls in
monitoring the non-compliance with KYC policies/
procedures   In view of the above, the Reserve
Bank of India has imposed a penalty of Rs.15.00
lakh (Rupees fifteen lakh only) on the bank.    
Standard Chartered
Bank,   the bank had violated the RBI
guidelines/directives/instructions relating to  
KYC norms,   failed to verify the end use of
funds in respect of loans granted against shares
to a number of individuals.   In view of the
above, the Reserve Bank of India has imposed a
penalty of Rs.5.00 lakh (Rupees five lakh
only) on the bank.  
Vijaya Bank,   the bank had violated
following RBI guidelines /directives/instructions.
  a) Opening multiple accounts without adherence
to KYC norms  b) Failing to monitor large value
transactions  c) Failure of internal control to
check the irregularities in KYC compliance and
monitoring of transactions in the deposit
accounts. a ) .In view of the above, the Reserve
Bank of India has imposed a penalty of Rs.10.00
lakh (Rupees ten lakh only) on the bank.
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IGF Sources

• Small Applicants- investors
• SEBI, RBI, Fin Ministry, NSDL, CDSL, Income Tax
  Dept, Exchanges
• Media Reports
• Market Experts Source
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