Last week, the manager of a Kolkata-headquartered bank in Nagpur received a call from a person who claimed to be the bank’s chairman. He narrated a story about his brother-in-law being in a serious jam and his urgent need for cash to make some pay-offs and get him out of trouble. The official was asked to arrange for the cash from bank funds and hand it over to someone who could come and collect the money. Accordingly, the official reportedly handed over Rs 12 lakh to the person indicated. A day later, he discovered that he has been horribly duped; his chairman was clueless and had made no call. The officer has been suspended and an inquiry initiated against him. However, leaders of another bank officers’ organisation say that the same fraud has been attempted at several nationalised banks. In some cases, officials are prudent enough to cross-check with the chairman and avoid the trap; but at least one other official has been similarly cheated. A good banker ought to have turned down the Chairman’s request even if it were genuine, but an obliging banker also ought to have been prudent enough to cross-check with the chairman before forking out such a large sum of money. Bankers are convinced that this is the work of an organised gang that carefully chooses its victim, ensures he has access to cash and probably sets him up to believe the story without asking too many questions. Since the fraudsters have targeted different banks and cities, their modus operandi has not been nationally exposed.
Home loan frauds
A recent study apparently points out that the home loan market has multiplied 11 times in five years, with credit deployment increasing from Rs 14,100 crore in 2000 to Rs 153,267 crore by October 2005. This is great news, since adequate housing is a key factor in India’s transformation. The bad news is that nationalised banks are another big target of home-loans fraudsters and defaults. A year ago, United Bank of India officials colluded to hand over loans of Rs 25 lakh each to 110 workers of a construction company based on a single sheet of fake documentation. The money was quickly transferred and routed through several accounts and found its way to Mumbai. An investigation was launched, but the information was carefully hidden from the public. More recently, six nationalised banks and a housing finance company were cheated in Gujarat when the borrower was found to have used the same set of documents to borrow from each bank and defaulted in every case. This case too is being quietly investigated by the police. A leading bank reportedly shut down it home loan operations at certain branches after detecting collusion by its own staff in various frauds. Worryingly, the numbers are adding up. While HDFC and ICICI Bank’s bad loans in the housing finance segment are anywhere between 0.5-1 per cent, in case of PSUs it is a fairly high 4-5 per cent.
On December 19, 2005, this column wrote that the number of PAN (Permanent Account Numbers) cards issued by the Income Tax (IT) Department is almost twice the number of Income Tax assesses. The information came from a top IT official who did not want to be named. My source said that the IT Department was in denial mode and trotting out a story that people may have obtained PAN cards in anticipation of paying taxes in future. The facts are that India has just around 26 million assesses of which only 20 million actually pay tax. Last week, a newspaper reported that the IT Department is finally admitting to one million duplicate PAN Cards out of 43 million that have been issued. The fraudulent ones may soon be deactivated. But unless 43 million people have begun to file returns and the number of tax payers has increased dramatically, the IT department needs to re-check its findings and clean up the issue process. Otherwise, the Finance Minister’s move to make PAN number mandatory for all stock market transactions will only accelerate the fraud.
Check this out
The official website of the Securities and Exchange Board of India is www.sebi.gov.in, but a little change can lead an investor to utter confusion unless Sebi initiates steps to solve the problem. Click on www.sebi.co.in and you land up with a strange website that is a mish-mash aggregation of information or links to a variety of global websites. The home page says, ‘‘Welcome to Sebi.co.in. If you’re looking for channeling stocks, national stock exchange of india, transfer agent or anything similar, go ahead and browse our comprehensive resource directory. You ought to find something interesting!’’ Further clicking leads you to websites on gold trading, penny stocks, stock exchanges, commodity trading and even baseball sites. There is no information on who owns and runs the site, but it is clearly Sebi’s job to end the confusion, especially since it uses a ‘‘.in’’ suffix.