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Two Indian men face custody over alleged forex markets fraud

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flag of indiaTwo men are set to be placed under arrest over their alleged role in a foreign exchange fraud scam which has rocked India.

Anand Naik, who was Assistant General Manager of the Corporation Bank, and the Deputy General Manager Padmanaba Reddy have both had their anticipatory claims for bail denied by the Supreme Court.

The pair stand accused of approving loan releases based on letters of credit which were, in fact, fake. They are accused by police of carrying out the crime at the Bank’s branch in Tirupur, which is a city in the state of Tamil Nadu.

It is believed that a wide range of other individuals have been implicated in the alleged scam as well.

According to local media, there are six others involved. Another is R Priya and her husband A Senthil Kumar, both of Alankadu. In addition, Rajesh Kanna and Amit Thapar were also accused.

The final two are Foreign Exchange Senior Managers at the Bank in question. These two were only identified as Somayajilu and Shankar.

Kanna and Thapar have not been arrested, but all of the others have.

According to a police source who spoke to the Times of India, the original pair – Naik and Reddy – have been told that they have just a couple of weeks before they must declare themselves to authorities.

“The apex court has directed the AGM (assistance general manager) and DGM (deputy general manager) to surrender within two weeks and co-operate with the investigation”, the officer said.

“We are expecting them to surrender or will arrest them”, the officer added.

In further updates, the officer told local press that the alleged scam focused around something apparently as innocuous as a knitwear shop.

“Senthil had registered a knitwear export unit, but hardly exported any goods. He managed to get Rs 10.2 crore as loan from the SME branch of Corporation bank near the Old Bus Stand, without pledging any collateral security”, the officer said.

Rs 10.2 crore is equivalent to approximately £1.13 million British pounds or $1.4 million US dollars.

Senthil Kumar and Rajesh Kanna allegedly then executed their forex fraud, in part by creating so-called “letters of credit”, which promised foreign purchasers that there would be a forex transaction covering payment once the knitwear items arrived.

The unnamed officer continued: “Corporation Bank fraudulently sanctioned the credit given against LC worth Rs 8.34 crore to Haroon. But Senthil gave him only Rs 5 crore and took the rest.”

In other statements given to the press, the officer outlines allegations which focus on the role of customs officers.

It is alleged that those working in the customs department then assisted Senthil to obtain forged documents which allegedly boosted his plans.

Foreign exchange fraud is not out of the ordinary in India.

Earlier this year, for example, four people from Mumbai were taken into custody after they were accused of defrauding people to the tune of Rs 5 crore.

In a development which reflects the technological sophistication of those both allegedly carrying out forex fraud and those investigating it, the four were found based on mobile phone signals which were coming from a particular location.