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| Derivatives scam: Notices issued to finmin, RBI |
| BS Reporter / New Delhi Aug 07, 2009, 00:08 IST |
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 The Orissa High Court has issued notices to the Reserve Bank of India (RBI), the Ministry of Home Affairs (MHA), the Ministry of Finance (Finmin) and the Central Bureau of Investigation (CBI) on a petition regarding a derivative scam of Rs 25 lakh crore.
The case involved Indian business houses which suffered huge losses on account of exchange derivative contracts that they entered into a couple of years ago to hedge their foreign exchange risks. The high court ordered issuance of the notices on July 23 and gave the respondents three weeks to file their responses.
When the dollar rose substantially, corporate houses were forced to deal with lower rates because of derivative agreements. For instance, when they were supposed to get Rs 50 against a dollar for the price of goods exported, they were paid much Rs 40 as per their derivative agreements. The dealers were taking the differential Rs 10. However, dealers said that they got only 10 paise per dollar.
The petitioner wanted to know where the rest of the money went and who were the beneficiaries. He alleged that some RBI and other government officials were involved in this scam and the differential money went to foreign countries or to some unknown hands instead of coming to the forex reserves of the country.
Forex derivative contracts worth $3 trillion were traded in India as of December 2007, while the total foreign exposure of India was not more than $500 billion annually. The counsel of the petitioner alleged that the total scam was of around Rs 25 lakh crore and requested the court to hand over the matter to the CBI to ensure that the wrongful gains were deposited in the account of the President of India. The next hearing in the case has been slated for August 17.
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