Srinagar : Governance at J&K’s premier financial situation J&K Bank continues to plummet. Earlier it was a spate of Non-Performing Assets (NPA’s) amounting to couple of thousand crore and more , which management of the bank attempted to hide but now a massive fraud has been detected in the Bank with active collusion of the top management. As per reports the entire Delhi zone is under scanner for purchasing fake letters of credit (LC’s) to the tune of whopping Rs 150 crores. The fraudsters as per sources initially started their activity way back in year 2011 from Ghaziabad branch through accounts titled as M/S Sanjay Electronics, Maa Durga, Amit Trading, Nitin Gupta and Pankaj Gupta. Thereafter the fraudsters spread their operations to Rajendra Place branch and commenced their operation through M/S Electronic Points, Mayur Trading Company, Ganesh Trading Company, Ankush Gupta and Pawan Kumar Gupta. Reportedly the modus-operandi followed by the swindlers was that they would draw cash against fake Letters of Credit (L.C) of other banks without getting the same confirmed from the establishing bank. This entire operation had the blessings of top management of the bank and the same is established by the fact that the facility was enjoyed by the fraudsters without bank doing any due diligence and credit assessment which is an established norm in such cases. This is further reinforced by the fact that the routine inspection of these branches was deliberately not undertaken to hide the scam and wrong doings of the management of the bank at very senior levels. The Audit and Inspection department of the bank and even the Audit Committee of Board have not initiated any action in the matter so far and have been caught napping thereby putting a serious question mark on their ability and conduct the operations of JK Bank. Now that the amount of fraud has snowballed to over Rs 150 crores andthe branch heads involved namely Vijay Kumar Khazanchi and Avtar Kaul have been placed under suspension on 17th, November 2014 for their acts of omission and commission at their respective branches. The axe has fallen on the small fry while as other functionaries of the bank which includes incumbent Zonal Head and erstwhile Zonal Head presently manning a top management position have been let go scot free. The top management functionary with whose active connivance and complicity the fraud has been perpetrated has misused his official position and prevented the Compliance and Regulatory Department from reporting the fraud to Reserve Bank of India despite it being mandatory and a regulatory requirement. The regulatory guidelines explicitly specify that frauds of this nature and quantum are to be reported within one week of its surfacing. As per regulatory guidelines the bank has to file FIR with crime branch in this case and it is also to be reported for investigation to Serious Fraud Investigation Office (SFIO) Ministry of Company Affairs, Government of India besides Banking Security and Fraud Cell which is specialised cell of Economic Offences Wing of the CBI keeping in view the fact that the quantum of fraud is much more than Rs 25 crore.
Posted on: Tue, 16 Dec 2014 18:01:35 +0000
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