Kotak Mahindra Bank manager held in note exchange racket in Delhi

According to ED officials, Kumar and some entry operators used a new modus operandi to exchange the notes.

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Money in old notes was deposited in tranches in accounts of several shell companies floated by entry operators involved in the racket. The bank then issued demand drafts in fictitious names. These drafts would then be cancelled for encashment, ED officials said.

“The deal was that Kumar would help exchange Rs 38 crore of old notes at a cut of 35 per cent which would be distributed among Kumar and entry operators who floated the shell companies. The total money that exchanged hands actually is Rs 51 lakh,” an ED official said.

Sources said as many as 84 demand drafts were issued by the bank through the accounts of almost as many shell companies. “These demand drafts have now been withheld. In fact, Kumar too had got demand drafts issued against the money he received as bribe,” the official said.

In a statement to media, the bank said it had itself alerted the Financial Intelligence Unit about the suspicious transactions and following investigations has handed over the dubious money to the Income Tax department.

Rohit Rao, spokesperson for Kotak Mahindra Bank, said: “With reference to the ongoing investigation of the said accounts, Kotak Mahindra Bank had proactively informed FIU… The bank has zero tolerance towards employees not adhering to its code of conduct, and takes strict measures against them. The bank confirms that it has a robust system of regularly and proactively filing necessary reports with the FIU for all large transactions.”

“On subsequent investigation by the Income Tax authorities, the bank, as per their instructions, has deposited the entire amount that was credited into these accounts with the Income Tax department,” Rao said, adding that the bank has fully cooperated with the authorities and “has demonstrated the highest standards of compliance, and the bank will continue to do so.”