Banking norms violated in Koda's transactions
Banking norms were not followed when Koda's men deposited Rs 640 cr in the Zaveri Bazar branch of Union Bank of India.
By ET Bureau |
Banks may make ordinary citizens run from pillar to post and ask for a host of supporting documentation ��� any cash transaction of more than Rs 50,000, for instance, must be accompanied by an income-tax permanent account number (PAN) card ��� the rules are quite different when it comes to the rich and the powerful.
The law and reality are often far removed in the Indian context. We have some of the best laws in the world. But only on paper! Nowhere is this better reflected than in the ease with which former Jharkhand chief minister Madhu Koda���s henchmen seem to have deposited Rs 640 crore in cash in a nationalised bank, even though strict knowyour-customer (KYC) norms cast an extra responsibility on banks to pay more vigil to such transactions.
KYC norms, aimed at ensuring banks are not used as a channel to route funds that are not kosher, often hamstring ordinary citizens . Indeed, ���no-frills��� accounts came up only because it became so difficult for the aam aadmi to meet the heightened security requirements brought in by new KYC norms in the wake of the 9/11 attacks in the US. But clearly, what is sauce for the goose is not sauce for the gander.
So while banks may make ordinary citizens run from pillar to post and ask for a host of supporting documentation ��� any cash transaction of more than Rs 50,000, for instance, must be accompanied by an income-tax permanent account number (PAN) card ��� the rules are quite different when it comes to the rich and the powerful.
The amount in question was deposited in the Zaveri Bazar branch of the state-owned Union Bank of India between November 2006 and December 2008 and should immediately have aroused the bank���s suspicions. KYC guidelines mandate banks to ���pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose���.
Further, banks have been told to ���watch out for transactions involving large amounts of cash inconsistent with the normal and expected activity of the customer and apply enhanced due diligence measures for higher risk customers, especially those for whom the sources of funds are not clear���.
These accounts are to be subjected to greater monitoring. They are also required to be monitored and reported to the Financial Intelligence Unit in the finance ministry. So much for the rule book! Clearly, none of this was done when Koda���s men transacted with impunity.
The law and reality are often far removed in the Indian context. We have some of the best laws in the world. But only on paper! Nowhere is this better reflected than in the ease with which former Jharkhand chief minister Madhu Koda���s henchmen seem to have deposited Rs 640 crore in cash in a nationalised bank, even though strict knowyour-customer (KYC) norms cast an extra responsibility on banks to pay more vigil to such transactions.
KYC norms, aimed at ensuring banks are not used as a channel to route funds that are not kosher, often hamstring ordinary citizens . Indeed, ���no-frills��� accounts came up only because it became so difficult for the aam aadmi to meet the heightened security requirements brought in by new KYC norms in the wake of the 9/11 attacks in the US. But clearly, what is sauce for the goose is not sauce for the gander.
So while banks may make ordinary citizens run from pillar to post and ask for a host of supporting documentation ��� any cash transaction of more than Rs 50,000, for instance, must be accompanied by an income-tax permanent account number (PAN) card ��� the rules are quite different when it comes to the rich and the powerful.
The amount in question was deposited in the Zaveri Bazar branch of the state-owned Union Bank of India between November 2006 and December 2008 and should immediately have aroused the bank���s suspicions. KYC guidelines mandate banks to ���pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose���.
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Further, banks have been told to ���watch out for transactions involving large amounts of cash inconsistent with the normal and expected activity of the customer and apply enhanced due diligence measures for higher risk customers, especially those for whom the sources of funds are not clear���.
These accounts are to be subjected to greater monitoring. They are also required to be monitored and reported to the Financial Intelligence Unit in the finance ministry. So much for the rule book! Clearly, none of this was done when Koda���s men transacted with impunity.
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