Tuesday, October 13, 2015

Foreign exchange transfer issues


                                                                                        BD21448_ स्थान/Place: Mumbai                                                      तारीख/ Date: 13.10.2015

Mumbai, October 13, 2015: With reference to the recent reports in various media reports, Bank of Baroda would like to share some information, as currently known, pertaining to the foreign exchange transfer issue from one of its branches in New Delhi.
The Bank’s internal investigation had detected irregularities in foreign exchange transfers from said branch. We have taken swift action, including suspension of five officers and change in the concurrent auditor firm of the specific branch.  The Department of Financial Services was immediately informed about the same, post which the concerned investigation agencies – CBI and the Enforcement Directorate were approached to conduct a detailed probe of this matter. We understand that the CBI and the Enforcement Directorate have filed FIR and have registered cases against certain private parties (account holder – remitters) and the concerned Bank officials.  The Bank is co-operating with all the investigating authorities by providing all the requisite information.   
The investigation currently underway pertains to 59 current accounts, which were opened during the period between May 13, 2014 to June 20, 2015 and were used for outward foreign remittance transactions aggregating to USD 576 million (INR 3672.30 crs) predominantly for the purpose as “Advance remittance for imports” to overseas parties numbering about 418, mainly based in Hong Kong.
It is pertinent to note that less than 10% (INR 343 crs) of the amount involved had been deposited in these accounts by way of cash and balance 90% amount had been received through RTGS / NEFT from 51 different banks.  Bank would also like to clarify that while the investigations are underway, at the current stage, it does not envisage significant financial losses on account of this incident.
There are many unanswered questions which continue to be probed, such as opening of current accounts inspite of inconclusive KYC process in some cases, individual failure of detection of irregularities, non-follow up of system alerts to track exceptional transactions and reasons for the long lead time to identify these irregularities.
The Bank and its Board of Directors are deeply distressed by this incident and take an extremely serious view of the matter. The Bank is undertaking a comprehensive review to identify deficiencies in the structure, processes and systems, with a view to prevent recurrence of such an incident.  The Bank’s Board of Directors reaffirms its commitment to upholding the highest standards of compliance, corporate governance and ethics. The Bank reassures its stakeholders of taking all the necessary actions to safeguard its reputation as a trusted Bank.
Commenting on the incident, MD & CEO, Mr. P.S. Jayakumar said, “My utmost priority is to examine the current situation and bring about the necessary changes within the bank to ensure such unfortunate incidents do not recur. This will include the appointment of an external accounting firm for full review of our KYC norms and its effectiveness across all branches. I am deeply committed to resolving this issue and seek the support of all stakeholders during this period.”

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