Two more RBI officials held in currency exchange fraud in Bengaluru

19 Dec 2016


The Central Bureau of Investigations (CBI) on Saturday arrested two more officials of the Reserve Bank of India (RBI) in connection with the currency conversion fraud cases.

The two accused, identified as Sadananda Naika and AK Kavin, are posted as senior special assistant and special assistant at RBI's cash department in Bengaluru.

According to the CBI, the accused duo fraudulently gave away new currency notes to unknown RBI officials and others in replacement of demonetised notes to the tune of Rs1.99 crore, in violation of the currency exchange limits imposed by the RBI.

"It is alleged that both the accused and other unknown officials of RBI, Bengaluru entered in criminal conspiracy with unknown others," said the official. Among several sections of the Prevention of Corruption Act and the Indian Penal Code, the duo was slapped with charges of criminal conspiracy, fraud, criminal breach of trust and so on.

The CBI had last week arrested K Michael, a senior special assistant in the 'issue department' of RBI's regional office, who was allegedly involved in a huge racket, involving bank officials and influential middlemen operating an exchange racket of Rs500 and Rs1,000 denominations.

CBI had also arrested JD (U) legislator Veerendra in connection with the seizure of Rs5.70 crore in new Rs2,000 notes from his premises. Tax officials had seized Rs5.7 crore in Rs2,000 notes, besides Rs90 lakh in Rs100 and Rs20 denominations in Hubballi district and in Challakere.

The arrests, which comes less than a week after the arrest of Michael, put into question the role of officials at the central bank in the currency exchange process, initiated after the 8 November announcement by Prime Minister Narendra Modi banning all high denomination bank notes.

The RBI had, earlier this week, claimed that "elaborate instructions" had been given to bank managements to keep in check untoward transactions.

It was the arrest of Parashivamurthy, a cashier at a branch of State Bank of Mysore in Chamarajnagar district for allegedly accepting demonetised notes in exchange of Rs100 notes to the tune of Rs1.51 crore that led the agency to Michael.

Further probe revealed the connivance of more officials.

In another incident, CBI registered case against KL Bhoyar, Assistant Commercial Manager, Central Railway, CST Mumbai.

The agency said Bhoyar allegedly exchanged demonetised currency worth Rs8.22 lakh (approx) with new Rs2,000 notes and legal tender of Rs100 notes at booking counters at CST, Mumbai and Kalyan in Thane district.

The agency also recovered Rs2.2 lakh cash - in denomination of Rs 100 - in subsequent raids.

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