‘Our overseas branches work under host and home country regulations’https://indianexpress.com/article/news-archive/web/our-overseas-branches-work-under-host-and-home-country-regulations/

‘Our overseas branches work under host and home country regulations’

Bank of Baroda (BoB) has been facing allegations of facilitating money laundering through its international branches

Bank of Baroda (BoB) has been facing allegations of facilitating money laundering through its international branches. In an interview with George Mathew,BoB chairman and managing director SS Mundra clears the air over the recent controversies. Excerpts:

There were reports in a section of the media about money laundering through a BoB branch in Nassau,Bahamas. What’s your reaction?

These reports are absolutely baseless. There is no substance in such allegations. All our accounts are compliant to know-your-customer (KYC) and anti-money laundering (AML) guidelines. There is no way such things can happen through our branches. You must remember that overseas branches are under local supervisory framework. Besides,the entire money coming to the Nassau branch comes through the New York account of international banks. There are so many filters and checks in the US banking system. Bank of Baroda’s Nassau operations are conducted strictly within the regulatory framework of host/ home country and are subject to usual systemic controls.

Did al-Dirham Exchange,which was named in an

Indian government dossier on Dawood Ibrahim’s operations route funds through the Nassau branch?


I would like to make it clear that the bank never had any relationship with this company in the past or present. So there is no question of any such routing of funds. However,I would like to clarify that Nassau has been maintaining among others,the account of Dubai Exchange for last several years. This company was directly dealing with us for the last 12 years and the family which promoted the company was with us for 35 years. It is a KYC-compliant account where transactions takes place in normal course of business to established banking channels. All AML guidelines are followed. Hence we deny any involvement of Bank of Baroda in the alleged transfer of funds as reported in the media.

What is the regulatory regime for the overseas branches of BoB? Are all of them KYC/ AML compliant?

We follow the regulatory framework of the host and home country and all our branches subject to systemic controls including KYC and AML guidelines.

Do you see the possibility of CRR and repo rate cut in the Reserve Bank of India’s monetary policy review to take place in May?

I think there is scope for a reduction in cash reserve ratio (CRR) in the RBI’s annual review next month. The repo rate — the interest rate at which banks borrow short-term funds from the RBI — can also be reduced. But repo rate cut will work only when the liquidity is comfortable. However,looking at the present liquidity situation,there is more emphasis on CRR cut.

Will deposit rates fall in the coming months? When can we expect the next round of fall in the lending rate?

In fact,deposit rate has already started declining. If there is further reduction in policy rates by the RBI,there can be more decline. Simultaneously,lending rates will also decline. The liquidity position has improved now.

Has the bank been able to control stressed assets? Do you think NPA levels will come down in 2013-14?

Each bank has different composition of non-performing assets (NPAs). We expect NPAs to come down in the coming months,provided the economic environment remains healthy. If some unforeseen economic developments happen,then we can’t say how stressed assets will move. The situation is under control.

Many projects have been stalled for various reasons,including lack of funds. Do you see the situation improving?


The government is taking steps to identify reasons for the delay in project implementation. The finance minister has said he will look into project-specific issues. I hope the situation will improve with the government taking specific steps.