The Central Bureau of Investigation (CBI) is investigating foreign exchange contracts to find out whether some exporters had engineered deals through complex derivative instruments resulting in a drain of at least Rs 755.45 crore.
The key suspicions are about misuse of photocopies or multiple use of same papers.
A derivative is a hedging instrument whose value is derived from some other underlying asset such as currency.
An exporter who is expecting payments in US dollars at a future date can hedge his position against fluctuations by entering into an agreement with his bank to sell the dollars at a price fixed earlier. This saves the exporters the risk of getting a lower amount if the value of the dollar goes down during the intervening period.
Investigations and scrutiny by the Reserve Bank of India (RBI) show that many exporters may have allegedly entered into derivative contracts by making false declarations about the value of their assets during 2007 and 2008 in gross violation of the country’s foreign exchange regulation laws.
A preliminary CBI report accessed by Hindustan Times showed in several cases banks have allegedly overlooked many basic procedures.
The RBI had, in a report to the CBI in October, noted the unrealised foreign exchange dues in 11 banks, the report said.
Some of these banks had booked contracts without carrying out due diligence.
“Even where transactions were based on underlying exposure, the banks relied on the photocopies of documents for ascertaining exposure. This also led to a misuse by customers who entered into deals with a number of banks,” the RBI said.
The CBI said it was awaiting responses from the banks.
“Most of these banks have sought time to furnish the requisite data and information,” it said in a report last month.
The Enforcement Directorate, which tracks foreign exchange irregularities told the CBI in a letter that it had also initiated a probe into these deals.