CASE STUDY : CREDIT OPINION REPORTS

(NAME OF INVOLVED PARTIES ARE NOT DIVULGED DUE TO OBVIOUS REASONS)

ACTUAL CASE NO. 1

An infamous bank fraud of huge amount was detected in February, 2018 in India. The Bank suspended 10 officers over the scam and referred the matter to Government of India’s top investigative agency. The Bank in a letter warned the other banks by revealing the modus operandi used by the bank officials.

It was found that none of the transactions were routed through the CBS system, thus avoiding early detection of fraudulent activity. In case of LoUs, it has been found that at the time of issuing LoUs for a smaller amount by SWIFT, the transaction was routed through the CBS system but subsequently, amendments were made in these LoUs by substantially enhancing the amount of LoUs and transmitted through SWIFT without routing these enhancements through CBS.

LoUs were opened in favour of overseas branches of Indian banks for import of goods for a period of one year for which as per Reserve Bank of India guidelines, the total time period allowed is 90 days from the date of shipment.

When fraudster companies asked for LoUs for raising buyers’ credit after the retirement of the Bank employee involved in the scam, the Bank sought 100 per cent cash margins for issuing LoUs . Thus fraud came to light.

ROLE OF CREDIT INFORMATION PROVIDERS :

There are few Credit Information providers in the country who are on the panel of banks. Mira Inform is one of them having existence of over 36 years, providing real-time credit information to several hundred clients in and outside India.

During 2011-16, there were 38 credit opinion reports prepared by Mira Inform for this banks on fraudster overseas entities. Findings in all those reports were negative and unfavourable but perhaps, these were ignored, overlooked or removed from the bank’s records. Hence, investigative officers asked us to issue the duplicate copy of each report. Mira Inform has spontaneously provided all the copy of past reports prepared for this fraudster companies.

OUTCOME

The concerned department was astonished to find all 38 accurate reports which were prepared and provided to the bank for their foreign exchange transactions of the referred fraudster companies. The concerned investigative officer was impressed with Mira Inform’s high quality reporting and as if he said that the country and bank could have saved several thousand crores of rupees based on Mira Inform’s credit opinion reports.

Following message of an investigative officer has encouraged Mira Inform’s to do more and more ‘good work’

“We salute to the hard working and honest Indians who are contributing to Indian growth story by their dedication and zeal”.


ACTUAL CASE NO. 2

The alleged huge forex scam stirred up a hornet’s nest for the India’s banking sector in the year 2015. It was alleged that a whopping few thousand crore black money was remitted from bank to Hong Kong camouflaged as payments for non-existent imports. The amount was allegedly deposited in 59 accounts in cash as advance for imports that never existed. In October, 2015, two top Government investigative agencies started investigating in the matter. It was alleged that the amount was deposited in 59 accounts of one of the bank’s branch in cash as advance for import and the money was sent to some select companies in Hong Kong. The bank’s branch opened 59 current accounts from May 2014 to June 2015 through which large foreign exchange remittances were made. Remittances were sent to Hong Kong and Dubai via banks, actual exports were sent to Afghanistan. In October, six bank officers were arrested on charges of criminal conspiracy, cheating under the Prevention of Corruption Act. The other four arrested include working with the foreign exchange division of a famous private bank.

ROLE OF CREDIT INFORMATION PROVIDERS :

There are few credit information providers in the country on the panel of various banks. Mira Inform is one of them.

OUTCOME

During the period, 75 reports were sought by the bank from Mira Inform on Indian and overseas entities. Out of 75 reports, there were 72 negative reports submitted to the bank.

Asst. Director of the investigative agency sought soft copy of our past reporting done for this bank. While going through all the reports, he complimented Mira Inform team for their excellent job of producing high quality and accurate business information reports.