The Enforcement Directorate (ED), the economic crime investigation wing of the Ministry of Finance that had blamed UBS AG for non-cooperation in tracking a multinational trail of money transfers across Switzerland, New York, the British Virgin Islands and Pune, has now given the Swiss bank a clean chit.
Following this, the Reserve Bank of India (RBI) has cleared UBS’ branch licence that was pending since 2004 and was recently put on hold over the money trail.
RBI Deputy Governor V Leeladhar confirmed that the retail banking licence has finally been cleared. Last year, the banking regulator issued a licence, allowing it to open its first branch in Mumbai, but later put it on hold. “The licence has been cleared… they have been permitted to start a branch,” Leeladhar said. A person close to the central bank said the ED go-ahead was given late last week.
“The regulator has nothing against UBS. Once the ED cleared it, the licence was cleared,” said this person who didn’t want to be identified.
RBI’s clearance also means that, technically, UBS can buy the Indian mutual fund business of Standard Chartered Bank. UBS’ reluctance to cooperate with Indian authorities to unravel a multinational trail of money transfers between Indian racehorse owner Hassan Ali Khan and a fugitive Saudi arms dealer not only cost the Swiss bank its banking licence but also the mutual fund deal last year.
UBS was set to buy the mutual fund business of Standard Chartered for $118.2 million (Rs 470 crore) but the RBI declined to give its nod in the absence of clarifications it had sought in regard to transactions involved.
“UBS has given those clarifications and the ED has cleared the bank,” this person said.
Manisha Girotra, managing director and chairperson of UBS India, couldn’t be reached for comment. An e-mail sent to her did not elicit any response. The Hong Kong-based spokesperson of UBS declined to comment.
UBS is present in India through UBS Securities India Pvt. Ltd, a broking and investment banking arm, headed by Girotra. It also runs a private wealth management business and an offshore unit in Hyderabad. Standard Chartered officials also refused to comment on whether the bank will revive the deal. It called off the deal with UBS in December and said it would be looking for a new buyer soon after RBI refused to clear the deal.