I-T, ED probe Rs 460 cr Citi fraud case: govt

The government today said Director of Income Tax (I-T) and Enforcement Directorate (ED) have initiated investigation in Rs 460 crore Citibank fraud case.

"The Investigation Directorate of the Income Tax has initiated necessary enquiries as far as the source of deposit of persons in Citibank is concerned," Minister of State for Finance S S Palanimanickam told Rajya Sabha in a written reply.

The ED has initiated enquiries in the matter, he said.

Several depositors and high-networth individuals (NHIs) lost Rs 460.91 crore fraud which was engineered by a Citibank's Global Wealth Manager Shivraj Puri who was working at Gurgaon branch of the bank.

Palanimanickam further said, to reduce or prevent the incidence of frauds, the RBI has been sensitising banks from time to time about common fraud prone areas through issuance of modus operandi circulars on various types of frauds.

The RBI also issues caution advises to banks to exercise due diligence while sanctioning fresh loans facilities to the borrowers mentioned in such advise, he said.

In a separate response, Minister of State for Finance Namo Narain Meena said, Punjab National Bank has written off bad debts to the tune of Rs 466 crore in 2008-09 and Rs 853 crore in 2009-10.

At the same time, Bank of India has written off Rs 384 crore in 2008-09 and Rs 744 crore in 2009-10, Meena said.

RBI had advised the banks that all possible steps to recover the dues should be taken and if there are no further prospects of recovering the debts, the decisions to write off may be taken in the larger interest of the banks.

Replying to another question, Meena said the government has decided to provide equity support to some public sector banks to enable them maintain a Tier-I capital of 8%.

Such a support are also to be provided to those banks where the Government of India's holding is less than 58%.

Modalities in this regard are being worked out, Meena added.