The Hindu Business Line : Union Bank to tighten customer verification procedures

Mumbai, Nov. 12 Union Bank of India plans to revisit its customer verification procedures as well as the norms for triggering alerts in case of high-value transactions. This follows the Enforcement Directorate stumbling upon unusually large volume of cash transactions amounting to about Rs 600 crore put through by a Balaji Group company — Balaji Bullion Bazar — at the bank’s Zaveri Bazar branch in Mumbai.

The transactions in question were predominantly put through over a six month period from November 2006 to April 2007.

Balaji Group’s promoter is believed to be linked to the former Jharkhand Chief Minister, Mr Madhu Koda, now in the eye of a storm following simultaneous investigations by revenue authorities and ED to get to the bottom of the alleged accumulation of wealth and investments made by the latter and his associates.

Industry observers pointed out that in the bullion trade it is not unusual for firms to put through large volume cash transactions at bank branches. Hence, the transactions undertaken by Balaji Bullion may not have set the alarm bells ringing at the branch level.

“According to regulatory requirements, we have complied with all KYC-AML (Know Your Customer-Anti-Money Laundering) guidelines. The company in question used to credit its account at our Zaveri Bazar branch and withdraw funds from our Noida branch for purchasing bullion from our bank as well as from others. On our part, we are conducting a thorough audit of this account,” said Mr S. Govindan, General Manager, Union Bank of India.

The bank, according to Mr Govindan, is investigating the case and could further tighten the customer verification norms as well as the threshold for triggering alerts in case of high value transactions.

Besides bullion trade with manufacturing units at Noida and Surat, the Balaji Group has interests in real estate. According to the Group’s website, Balaji Universal Tradelink Pvt. Ltd & Balaji Lifestyle Realtors Pvt. Ltd. have developed flats in Matunga, Mumbai, and expect to generate revenue of Rs 50 crore by sale of flats. The Group also proposes to develop a residential complex in Wadala, Mumbai, (sale value Rs 200 crore) and a 1 lakh sq ft mall at Kalyan near Mumbai.

The Group has a foreign exchange company — Royal India Forex Pvt. Ltd — and coal mining interests overseas.