BOMBAY: The Reserve Bank of India (RBI) has discovered a gap of over Rs 5,000 crore in government security holdings reported by various banks and in the records of the public debt office (PDO) of the central bank.

The RBI had initially called for a statement of government security (Gilts) holdings of all banks, The enormous gap was discovered when the statements were matched up with records maintained in the special general ledger (SGL) of the RBI.

Following this discovery, the RBI officials fanned out to every single bank conducting securities transactions and began an exercise of checking every single bankers receipt (BR) and document held by the banks, in fact the inspection has created a panic in the banking system, calling a near halt to trading in the securities market.

However, it must be made clear, the gap of Rs 5,000 crore is not necessarily indicative of the extent of scam, but is more are flection of the rot in the banking system and inadequate monitoring by the RBI. A part of these funds say top level sources, has been siphoned out of the system.

According to reliable sources, the extent of the scam is expected to be in the region of Rs 2,000 crore. They suspect the Rs 3,000crore gap is probably caused by banks including certain securities in their report which may not be a part of the SGL records.

Though the mismatch of the RBI books and the resulting panic has been making the rounds for several days, top RBI officials when contacted denied the figure.

 R.J anakiraman, deputy governor of the RBI, in a telephonic conversation denied the difference of Rs 5,000 crore plus. When questioned further he said the facts would be known only after the RBI completes its detailed investigation into the security holdings of various banks.

Janakiraman, however, added “There may be a difference between what the banks show and what is in the PDO books, There is always a difference.” But, he declined to put a figure to the difference.

However, at various meetings with the bank chairman, called by the RBI, the impression among several attendees was that the RBI seemed to believe that a clearing or settlement of BRs may actually reveal a discrepancy between the books,

Dealers in the securities market are extremely critical about the panic created in the market by what they term “ham-handed” investigations of the RBI. According to them, the RBI should first localize the fraud and reconcile the books at a desperate speed as on a particular date.

They point out the account holders in the SGL office are all large banks and institutions, totaling only around 30 with less than 200 accounts, and a reconciliation would not be difficult to achieve.

The brokers and dealers in government securities are also demanding a proper clearing system for banks, and a proper recognition of the role of brokers, so that transactions in call money and other securities are not conducted clandestinely and furtively with quid pro quos in other transactions.

Article extracted from this publication >>