Citibank fraud: Reserve Bank of India to probe scam

Gurgaon: The Reserve Bank of India (RBI) has begun a probe into the Rs 300 crore fraud at Citibank's Gurgaon branch.

RBI Executive Director G Gopalakrishna told reporters on Friday, that soon a statement in this regard would be made.  

Shivraj Puri, a bank executive, had duped customers into depositing Rs 300 crore in accounts set up by him making them believe they were investing in a scheme the bank was offering.

On Friday, the Gurgaon police questioned the Chief Financial Officer (CFO) of Hero group, Sanjay Gupta and representatives of brokerage firms Religare and Bonanza in connection with the scam. (Read: Citibank fraud- CFO of Hero Group questioned)

The two brokerage firms are where Puri had invested the money and the Hero Group is apparently the investor of largest chunk of money in one of Puri's accounts.
''Destination of the money is into these two broking firms,'' said SS Deswal, The Commissioner of Police, Gurgaon.

However, the Hero Group has denied any wrong doing, and issued a statement saying

"These investments were made as part of routine treasury operation in what seemed like perfectly legal investment options. Hero Group is disappointed to learn that it has become a victim of the fraud under question."

According to the Gurgaon police, about 18 to 20 companies and 30 individuals had invested money in Puri's accounts in the last 14 months. The investment ranged from Rs 15 lakh and above.

The police also say that Puri had initially even returned some of the money at a 20% interest to win their trust.

The scam was unearthed when a customer cross checked Puri's offer with Citibank.

The police now claim that more people will be questioned in the coming days.