Mumbai, July 26: Alarmed at the growing incidents of money laundering and tax evasion through benami accounts and production of fake import bills, the Reserve Bank of India has directed all commercial banks to ensure strict compliance with account opening norms and monitoring of operations.

"If any transaction of a suspicious nature is revealed, banks should enquire about the transaction from the account holder and if no convincing explanation is forthcoming, they should consider reporting such transactions to the appropriate investigating agencies," a recent RBI directive, dated June 16, said.

The central bank has also directed the banks to take action against "erring" officials. "Deterrent action must also be taken against bank officials found guilty of violating the instructions," the RBI circular said.

The trigger-point was the Unit Trust of India's complaints about benami accounts and "fradulent transactions". "...Large number of instances of opening of accounts in fictitious names and perpetration of various fraudulent transactions... continue to be brought to our notice by certain institutions including UTI as also individuals," the RBI directive said. This, according to the central bank, is "indicative of considerable laxity" in complying with the apex bank's instructions at the operating level.

RBI said that banks are required to treat introduction (for opening an account) as not merely a formality but as a measure of safeguard against opening of accounts by undesirable persons or opening of accounts in fictitious names.

The central bank's directive was issued in the wake of large-scale pilferage of dividend warrants in transit and the encashment of the same using ficititious bank accounts. Institutional and high networth investors in the schemes of mutual funds, especially UTI, have been the most affected.

The modus operandi is to steal the dividend warrants enroute to the investors, mostly at the post-office levels, akin to the pilferage of share certificates, and encash them using fictitious accounts opened with the banks.

Once an account is used to encash a lot of stolen warrants, the miscreants make away and open other accounts for the encashment of further stolen warrants. Since the address given while opening the account is a fictitious one, the banks are unable to trace the account holder.

The maximum dividend warrant pilferage is reported from the eastern part of the country. Patna, Guwahati and Hajipur account for the maximum amount of warrant pilferages, say sources. "It has developed into an industry by itself where various functions of the operation, from stealing of warrants to encashment of dividend, are assigned to different individuals with special expertise, said a source at UTI.

According to sources, people who steal the warrants, say worth Rs 10 lakh, sell it off at a discount of about 50 per cent. Those who buy the instruments are able to encash the warrants without much trouble as they are known to maintain numerous fictitious accounts with various banks.

The siphoning-off of forex exchange, on the other hand, takes place through prosecution of fake import bills. Banks are required to keep a close watch on the operations in new accounts and monitor all cash transactions worth Rs 10 lakh and above on a regular basis.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.