Bhansali Used Time Lag In Cheque Clearing To Milk Sbi

The 14-day period for the warrant cheques issued by CRB Capital Markets to reach from the outstation branches of State Bank of India (where the cash is paid out against the cheques) to its Mumbai main branch aided C R Bhansali to siphon off funds from the countrys premier bank.

The warrants are essentially demand draft purchases for the outstation branches and have to be honoured by them.

These instruments are then sent to the Mumbai service branch which clears them and debits it to the account of CRB Capital Markets in the citys main branch.

According to SBI sources, the time lag between the encashing of the warrants at outstation branches and then reaching the main branch for tallying can take anywhere between eight to 14 days.

 

Once the warrants reach the main branch, it credits the branches which have paid warrant holders out of pocket.

CRB Capital Markets was supposed to pay the SBI main branch, where the non-banking finance company (NBFC) has a front funding account.

This, however, did not take place due to which the account was in overdraft to the tune of around Rs 60 crore at the time when C R Bhansali, the CRB Caps chief, absconded.

The sources said that as long as this systemic lapse is not removed, recurrence of the CRB-type fraud cannot be ruled out.

Corporate sources further pointed out that what Bhansali attempted was nothing unusual as some companies do exceed their overdraft limits while issuing the warrants.

But, these companies always square up with the banks before the cheques travel from the outstation branches (which disburse the payments) to the main branch for conciliation.

But in the case of CRB, the warrants were reportedly issued in favour of CRBs group companies.

This gave Bhansali the benefit of siphoning off more money than he could have done under normal circumstances.

As the SBI was defrauded, the bank suspended three of its officials in the Mumbai main branch on the ground of violation of certain systems and procedures.

However, according to V S Samanth, president, SBI Officers Association (Mumbai circle), there are no laid down systems are procedures for the clearing and payment of warrants.

According to sources, under the existing scenario anybody can commit a fraud on SBI.

For instance, the warrants presented at the outstation branches are essentially demand draft purchases and have to honoured.

Unless there is a system of cross-checking with the Mumbai main branch whether the front funding account of CRB capital market has the requisite balance or whether the funds are expected, the cash has to be paid out.

That apart, given the fact that the instrument take eight to 14 days to reach the main branch, Bhansali had adequate time to issue warrants up to Rs 60 crore till the overdraft came to light.

The sources point out that if the warrants reach the main branch earlier or there is electronic medium to confirm the figures, the fraud could have been nipped in the bud.

It is pointed out that the current fraud by the non-banking finance company is due to a complete systems failure.