Excise rebate scam lands seven banks in the dock

The Central Excise department has written to the Reserve Bank of India (RBI), seeking action against seven banks, including one nationalised bank.

This was informed by Sushilkumar Solanki, excise commissioner, Surat - I commissionerate.

"During the course of investigations in the excise rebate scam, we have learnt that seven banks opened accounts of firms, which have fraudulently availed of rebates. The accounts were opened without seeing the account holder and only on the basis of the account opening form, which was filled and signed by other persons," Solanki told mediapersons.

"The inquiries have revealed that the accounts were opened in the name of fictitious persons, and were operated by people other than the original account holders. Several other irregularities on part of the banks, such as handing over cheque book to a person other than the account holder, allowing cash withdrawal of more than Rs 50,000 on a single authorisation, overlooking signature variation were also observed," the commissioner said.

"We have written to the RBI, Ahmedabad, and brought to its notice the various irregularities committed by the banks. We have urged the RBI to initiate necessary action against the banks and the bank officials," he added.

Because of the lapses committed by the banks, the Excise department is finding it extremely difficult to trace them.

The seven banks against whom action has been sought are The Century Co-operative Bank, Punjab National Bank (Meghani tower branch), IndusInd Bank (Ring Road branch), The Textile Co-operative Bank (Citylight Road branch), UTI Bank (Ghoddod Road branch), The Royale Co-operative Bank and The Adinath Co-operative Bank.

The banks have, however, defended themselves, saying they did not commit any irregularities.

"The Excise department has said that there were irregularities in opening and operating certain accounts in our bank. We can say that we completed all the necessary formalities in opening as well as operating the accounts. The only mistake on our part was that we did not inform the Excise department about a cheque of a large sum of excise rebate deposited by a new account holder," Mahesh Malpani, chairman, The Textile Co-operative Bank, told Business Standard.

Ashok Chhajed, chairman, The Adinath Co-operative Bank, said, "We did not commit any mistake as alleged by the Excise department. However, in the case of a particular account, the bank staff are not sure, whether the account opening form was signed in front of them or not. This is a mistake on our part, but it is certainly not a very serious one."

Atul Parikh, vice-president, UTI Bank, refused to comment.