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