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HDFC Bank comes under radar of investigative agencies

The probe into the massive Bank of Baroda Scam reached the doorsteps of HDFC Bank on Tuesday after one of the six persons arrested by the investigative agencies turned out to be an official of HDFC Bank's Forex department. The probe agencies told dna that only Rs 343 crore, approximately 7%, of the total 5,151 crore, was deposited in 59 accounts as payment for imports, while the rest of the money came through 'banking channels from other banks including Hongkong based HSBC and China construction bank'.

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The probe into the massive Bank of Baroda Scam reached the doorsteps of HDFC Bank on Tuesday after one of the six persons arrested by the investigative agencies turned out to be an official of HDFC Bank's Forex department. The probe agencies told dna that only Rs 343 crore, approximately 7%, of the total 5,151 crore, was deposited in 59 accounts as payment for imports, while the rest of the money came through 'banking channels from other banks including Hongkong based HSBC and China construction bank'.

The revelation came on a day when both CBI and ED arrested two and four persons respectively for alleged laundering of money to the tune of Rs 6,000 crore at a branch of Bank of Baroda. While CBI arrested Suresh Kumar Garg, the assistant general manager of Ashok Vihar Branch and Jainis Dubey, the foreign exchange head, the persons arrested by the Enforcement Directorate include Kamal Kalra, Chandan Bhatia, Gurucharan Singh and Sanjay Aggarwal, who were allegedly involved in the transaction of 15 accounts. Bhatia, Singh and Aggarwal are said to be owners of companies based in Hong Kong and Dubai towards which the money was being transferred through 59 accounts at the bank's Ashok Vihar branch. 

According to officials of the Enforcement Directorate Kamal Karla, one of the accused arrested for his role in Bank of Baroda Scam told investigators, that he works in the Forex department of the HDFC bank and worked with other accused arrested in connection to the scam. Karla has stated that he had been helping Bhatia and Aggarwal for remitting the amount through Bank of Baroda. Karla according to ED used get a commission of 30-50 paise on every dollar remitted abroad.

dna tried to contact HDFC Bank for its reaction both via phone and mail, but could not get a response till the time of filing of this report.

Earlier both CBI and the Enforcement Directorate had launched full-fledged investigation in the Rs 6,172 crore suspected black money transfer to Hong Kong. However agencies now believe that the transfer of the enormous amounts of money is actually a Trade Based Money Laundering rather than a case of transferring of black money.

"It is not the case of black money stashed abroad but it is a case of Trade Based Money Laundering where exporter is gaining out of duty drawback due to over invoicing and importer gaining out of saving Customs duty by under invoicing,"said an official. 

"The total amount deposited in the 59 accounts is Rs 5,151 crore and only 6.66% (343 crore) of this amount has been deposited in cash in the bank, while remaining amount Rs 4,808 crore came through banking channels from the other banks,"said the official adding that the emerging evidence has brought HDFC bank on the radar of investigative agencies.

The internal audit by the bank had shown 59 new current accounts were opened in Delhi's Ashok Vihar branch in the name of different companies. following which crores of rupees were deposited into these accounts, sometimes four-five times a day. The companies, whose owners are shown to be different persons, then requested the bank for forex transfers to certain companies in Hong Kong. The recently arrested men has further given agencies an insight into the Hong Kong based companies modus operandi of their owners. Interrogation has revealed that the cost to exporter for remitting 1 $ abroad comes out to approximately Rs 1.20. The process involves changing the colour of money from black to white and vice versa.

"Mr Bhatia during his interrogation revealed that he was working in tandem with exporter Gurucharan Singh and he himself was also indulging in exports from his companies. In all he has so far revealed that he had sent foreign remittances to the tune of Rs 420 crore. Singh is the exporter of finished goods like readymade garments, fabric etc. and used to get the duty draw back on the exports made from his firm Dhawan Creative Prints Pvt. Ltd, CK Clothing, JS Hosiery," said an ED official. 

"Aggarwal formed companies in Hong Kong and Dubai with controls in his hand, so as to transfer required amounts (difference in import value to save import duty) in the bank account of the importers. During this period he had sent foreign remittances worth Rs 430 crore through Bank of Baroda," said an ED official. 

Bank of Baroda, on its part, has suspended two officials for allegedly being involved in  Rs 6,172-crore illegal foreign exchange transactions.This was after an internal audit by the bank detected the irregularities and informed the finance ministry, after which CBI and ED were approached for probe. 

Investigations so far have revealed that in this process, there is no loss to the bank. On the contrary the bank has gained due to increase in business.

Investigators said that illegal mechanism of hawala has been a favourite way to carry out such transactions, but for the last ten years banking channels are also being used.

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