Lack of wealth mgt guidelines caused Citibank fraud: Parekh

HDFC Chairman Deepak Parekh today blamed the Rs 400-crore Citibank fraud on the absence of specific guidelines for wealth management and expected the regulators to come out with norms in this regard.

“I think wealth management has spread so much that a huge amount of wealth creation has happened in India in the last decade. As a result, wealth managers and companies managing wealth for other people have mushroomed and there are no guidelines for them,” he said.

Speaking on the sidelines of the fifth global summit of Vibrant Gujarat here, Parekh said, “I think the government would come out with guidelines for the same”. Parekh said the country should have a good system and audits in place to prevent the recurrence of such frauds.

At present, there are no specific regulations for managing wealth for high networth individuals (HNIs) and they come under the norms for portfolio management by the Securities and Exchange Board of India (Sebi). In December, Shivraj Puri, a relationship officer at the Gurgaon branch of Citibank, was taken into custody for allegedly duping about 40 HNI investors and corporate entities to the tune of Rs 400 crore.

A senior official of Hero Corporate Services Sanjay Gupta, has also been named as a co-accused for allegedly getting Rs 20-crore commission from Puri in lieu of arranging investments. Vikram Pandit, the Indian-born global CEO of Citibank, and Chairman William R Rhodes, were also named in a separate FIR by an HNI investor.