Sen, the boss of the Saradha Group that is accused of defrauding lakhs of small-time investors, and Chatterjee, arrested for the fraudulent bulk transfer of Rs 120 crore from the West Bengal Infrastructure Development Finance Corporation (WBIDFC) to UCO Bank, have shown everyone the shortcut to earn crores, said a senior bank official who refused to be named.
All that one needs to do is to float a company, open a few current accounts in the company's name with banks, and keep switching funds to improve the company's credit history.
The next step is to sell the company to someone like Sen, who can take hefty loans from banks based on the firm's sound credit history. This was how at least six rackets had been operating in the state.
After the WBIDFC and Saradha scams came out in the open, the banks have gone into overdrive and unearthed at least 30 major bank frauds in the last one-and-a-half years alone involving at least six common fraudsters. Hundreds of crores have vanished from the banking system during this period, said sources.
Alarmed by the growing number of bank frauds, especially involving current account transactions, Kolkata Police has formed a working group with bankers to chalk out a mechanism to contain the crime. "We are working together with banks to curb such frauds," said Pallab Kanti Ghosh, the joint commissioner (crime).
So, how does the fraud work? According to bankers, it starts with floating bogus companies. Each racket has hundreds of companies registered with the registrar of companies. The next step is to approach banks to open current accounts in the name of those companies, following which small amounts — say, Rs 8 lakh to 10 lakh — are deposited with each of the accounts. For the next couple of years, the money is rotated from one account to the other.
Since the accounts belong to corporate entities, the banks get the impression that the accounts are highly active. With these so-called "regular transactions", the bogus companies also become eligible for loans. But after a few years, the accounts, along with the ownership of the companies, are sold for crores.
"Fraudsters like Indrajit come into the picture at this juncture. They park their ill gotten money into these accounts and transfer the amount through RTGS to another racket which, in turn, keep the money in its accounts," said a bank official.
Later, the racket in the chain refunds the money in cash that makes it difficult for investigators to trace the source. In the WBIDFC case, Indrajit had transferred the money from SA Enterprises's account in UCO Bank to accounts in Bank of India, Allahabad Bank, IndusInd Bank, ICICI Bank, Development Credit Bank, HDFC Bank and Punjab National Bank.
"Indrajit transferred the amount through RTGS to a similar racket from several accounts in his name. After the transaction was over, Indrajit took the amount from the custodian in cash and parked the money with another racket. The new custodian then transferred the amount to a new set of accounts that Indrajit had created," said the official.
According to bankers, it is difficult to trace the money after so many transactions have been done.
The working group had a meeting last month after the Saradha muddle surfaced. It is preparing a database of the modes of operation of various rackets and details of common fraudsters.
To curb frauds, banks plan more checks on e-transfer of funds
Electronic fund transfer from one account to another and opening of current accounts may soon become a little more difficult.
Taking a cue from the recent frauds in West Bengal, bankers are set to introduce a new set of security measures on current account operation. Savings bank accountholders may also face the heat as banks are planning to add a few more security checks on the electronic fund transfer or RTGS (real time gross settlement) channel.
In the second week of March this year, West Bengal Infrastructure Development Finance Corporation (WBIDFC) and West Bengal State Cooperative Bank were defrauded of Rs 120 crore and Rs 40 crore, respectively, through forgery of term-deposit receipts involving several public and private sector banks.
According to a senior official of Allahabad Bank, an informal working group comprising bankers and Kolkata police has been set up to suggest corrective measures.
“Based on our initial observations, we have realised that most of these frauds are being perpetrated using current accounts,” the official told Business Line.
CASE STUDY
The working group is in the process of preparing a case study on the modus operandi of such frauds. The report is likely to be ready by June-end.
Meanwhile, the police have arrested Indrajit Chatterjee, the alleged mastermind of the Rs 120-crore WBIDFC fraud.
“We plan to approach the Reserve Bank of India with our suggestions to make the process of opening of current accounts more stringent,” the official said.
UCO Bank, on its part, has tightened the norms for fund transfer using RTGS mode.
“Earlier fund transfer could be done by tallying the account and IFSC number.
“Now we are also asking for the name of beneficiary,” a senior official of the bank said.
The bank has also put restrictions on the amount that can be transferred through RTGS from branches other than the base branch (where customer actually holds the account).
WBIDFC had transferred Rs 59 crore in August 2012 and Rs 61 crore in January 2013 through RTGS to a current account at UCO Bank’s Circus Avenue branch in Kolkata to start term deposits.
The account, however, belonged to one SA Enterprises. Though the term deposits were never started, WBIDFC was handed over two term deposit certificates.
From SA Enterprises’s account in UCO Bank, money was remitted through RTGS to accounts in Bank of India, Allahabad Bank, IndusInd Bank Ltd, ICICI Bank Ltd, Development Credit Bank Ltd, HDFC Bank Ltd and Punjab National Bank.
In another such instance, fixed-deposit receipts issued to West Bengal State Co-operative Bank, which had deposited Rs 20 crore each in UCO Bank and Indian Overseas Bank, were also found to be “fake”.
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