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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.html
http://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 Managers job at Citibank


Primary job Other job

Modus Operandi
Shivraj Puri Relationship Manager, Gurgaon branch

Collection of funds

HNI & Corporate 51 HNI, Hero Group, Helion Advisors Pvt. Ltd.

Custodian Account - Premnath

Sheila Premnath

Deeksha Puri

Shivraj Puri

Brokerage Account

Religare Securities Ltd., Bonanza Portfolio Ltd., India Info line Ltd Normans Martin Brokers Pvt. Ltd. (Raghuraj Puri)

Investment in to Capital Market

Gullible Investors
How Easily tricked by Mr. Shivraj Puri ? Investors are greedy for 25 % Rate of Return vs Puris 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.

Cont

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.

Process of System
HNI Minimum investments Rs.10 lacs

Banks close ended offers and RMs 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 familys Saving account

Transferred in familys 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

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