The CitiBank Fraud Case
Prepared by:Ravi Baravaliya (M00037)Chetan Panara (M00086)Nikunj Patel (M00023)Bhavin Patoliya (M00025)Mahipal Chauhan (M00052)
Indian Banking Industry
Reserve Bank of India Act 1934 Indian Banks Can be Categorized two Parts:
Scheduled Commercial Banks Public Sector Banks Private Sector Banks Foreign Banks
Unscheduled Commercial Bank
Source: http://finance.indiamart.com/investment_in_india/scheduled_commercial_banks.htmlhttp://www.banknetindia.com/banking/combank.htm
Citibank World Wide
CEO-chairman
Leading financial service company
Business in 140 country
200 million customer
Broad range of financial service
Citibank in Asia
Citibank India
Established in 1902
Total business in India
Employee
Principle of banks in India
Job of Relationship manager
Relationship Manager’s job at Citibank
Primary job
Other job
Modus Operandi
Shivraj Puri – Relationship Manager, Gurgaon branch
HNI & Corporate51 HNI,Hero Group,Helion Advisors Pvt. Ltd.
Custodian Account - Premnath
Collection of funds
Brokerage Account Religare Securities Ltd.,Bonanza Portfolio Ltd.,India Info line LtdNormans Martin Brokers Pvt. Ltd. (Raghuraj Puri)
Investment in to Capital Market
Sheila Premnath Deeksha Puri Shivraj Puri
How Easily tricked by Mr. Shivraj Puri ?
Investors are greedy for 25 % Rate of Return vs Puri’s Greed. How fool of Customers?
Signing cheques Electronic fund transfers to an individual account. Fake Excel sheet statements. Portfolio management services.
Others Reasons : Nuances are not Clear. Extent of Loss are also not known. Citibank liability is not clear. Excuse by Bank.(Awards) City insider only hopeful about part of money recover.
Gullible Investors
Mr. Puri is concentrated on only Looting Investors. There is a Personal touch in whole Relationship.(Start a bank) Mind of Mr. Puri for Investors Vs Hero Group (Looting by employee). Name of Investor:
Munjal Family (Hero Group) / Through Sanjiv Gupta / Lost 28.89 crore.
Sanjiv Agrawal (Venture capitalist) (33 crore lost) Relationship Master: (Joint family venture) “Fraud Based on Relationship with help of Relationship.” System is working for Mr Puri. Note:
HNIs’ have no time to manage their money and leave the job to Wealth and Relationship managers.
Cont…
Process of System
HNI – Minimum investments Rs.10 lacs
Bank’s close ended offers and RM’s took unfair advantage
Trust build up
Creates own SPV (Assumptions)
Technology savvy bank – keep records of all transactions
A System Failure?
Fake SEBI circular
Misrepresentation of high return
Amount transferred in family’s Saving account
Transferred in family’s Demat account
Higher authorities are unaware about these large transactions on daily basis
SEBI and RBI are still unaware
Lesson from Citibank Fraud
Verification of Relationship manager Customers should not get carried away by big names Customers should be clear on their own financial goal The customers should not lend their signature to any
document without understanding the implications of the document.
The internal controls and systems of the wealth management entities should be clearly defined