Sucheta Dalal :Govt seeks audit of UBI branches for high-value transactions
Sucheta Dalal

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Govt seeks audit of UBI branches for high-value transactions  

November 17, 2009


Taking a serious note of Union Bank of India (UBI) not reporting high-value transactions, the government has asked the State-owned Bank to immediately carry out an audit of all its branches to check for such large deposits that may have gone unreported, reports PTI.

During a probe into alleged money laundering by former Jharkhand chief minister Madhu Koda, the Income-Tax (I-T) department had stumbled upon a bank account at one of UBI's branches at Zaveri Bazar in Mumbai where approximately Rs214 crore had been deposited in cash between 5th January and 30 March 2007.

The Bank, whose chairman has been summoned by the I-T department in the Koda probe, has now been asked for an audit of all accounts of UBI, suspecting that the Bank's branches throughout the country may not be following the norms.

"Not taking cognisance of transactions of such serious nature by you and non-reporting (of these) could have serious implications for the country. It is likely that your branches all over the country might be having many more such accounts with whopping cash deposits therein which have gone unreported," the I-T department said in a letter to UBI's chairman and managing director MV Nair. Bank officials did not comment immediately.

Manoj Punamia, stakeholder in the Balaji group, had earlier said that the company had no role to play in the Koda episode. However, there has been no word from the group after the Income-Tax and ED authorities questioned him.

The I-T department, which summoned Mr Nair, has said that the Bank did not furnish details of cash transactions worth more than Rs10 lakh by Balaji Bullion Corp and Balaji Bullion Bazar, two companies alleged to have helped Koda.

Union Bank's Zaveri Bazaar branch in Mumbai had accounts of Balaji Bullion Bazaar and Balaji Bullion Corp where there were cash transactions worth crores which were not reported to the Financial Intelligence Unit. While in one company there were cash transactions worth Rs214 crore between January and March 2007, in another company there were cash transactions worth Rs644 crore during 2006 and 2007.

The I-T department, in the letter to Mr Nair, has also said, "You are requested to kindly consider ordering a thorough audit of all accounts in your bank and furnish details of all those accounts which are having such cash deposits or which are of suspicious nature."

Under the Prevention of Money Laundering Act, banks are required to furnish to the Financial Intelligence Unit a statement of all cash transactions of more than Rs10 lakh.

The non-reporting of heavy transactions by a State-owned bank has raised several questions about the government's policy on checking huge money flow and now officials in the finance ministry are deliberating on how to plug the loopholes to make the PMLA more stringent.
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-- Sucheta Dalal