HOME TRADE SCAM (2002)

INTRODUCTION
BANKING TERMS
 Cooperative Bank:
Cooperative banks are owned and operated by the members for a
common purpose i.e. to provide financial service to agriculturists and
small businessmen.

 Gilts:
Gilt funds invest in fixed-interest generating securities of the
Central Government and state governments. It is low risk bond.

 Cash Reserve Ratio (CRR):

Cash Reserve Ratio (CRR) is a certain minimum amount of
deposit that the commercial banks have to hold as reserves with the central
bank.

 Statutory Liquidity Ratio (SLR):

The Statutory Liquidity Ratio (SLR) refers to the proportion
of deposits the commercial bank is required to maintain with them in the form
of liquid assets in addition to the cash reserve ratio.
HOW FRUAD HAPPENED

EXACTLY, a year after the securities scam involving stock broker Ketan
Parekh rocked the Indian financial markets; another rip-off of the kind has been
exposed. Under the pretext of gilt trading, almost Rs.600 crores has been
swindled from more than 25 cooperative banks - 13 of them in Maharashtra and
12 in Gujarat. It is likely that many more cooperative banks in both the States
are entangled in the racket that has exposed a nexus involving brokers,
cooperative banks and politicians. Sanjay Agarwal, chief executive officer of
Home Trade, who has been arrested for fraud, with publicity material for his
venture. The company was launched two years ago accompanied by an Rs.24-
crore advertising blitzkrieg employing cricket icon Sachin Tendulkar and film
stars Shah Rukh Khan and Hrithik Roshan. Home Trade and four of its affiliates
lured cooperative banks with two to seven per cent higher returns on investment
in gilts. The brokerage firm claimed to have bought government securities (G-
secs) for the banks. The G-secs were not physically delivered and investigations
reveal that they may not even exist. On their part, the cooperative banks may
have erred in not demanding delivery of the G-secs. Maharashtra's Corps of
Detectives said the embezzled money was used to play the stock market, mainly
to trade in shares of companies in which Home Trade had a stake or which
Sanjay Agarwal, Home Trade's chairman, promoted. When Home Trade
defaulted on payments and the loss of investments began to burn a hole in the
pockets of the Nagpur District Central Cooperative Bank, its chairman Sunil
Kedar filed a criminal complaint against Home Trade for not delivering G-sec
certificates worth Rs.125 crores. Sunil Kedar was arrested for bending the rules
to invest in G-secs and for preparing false documents. In order to undo the
damage, the State Registrar of Cooperative Societies (RoCS) dissolved the
boards of the scam-tainted banks on the recommendation of the Reserve Bank
of India (RBI). Sanjay Agarwal initially went missing but later surrendered
before a lower court in Nagpur.
CURRENT SENARIO
The case is still going on Nirav Modi is been arrested in London for PNB fraud
and some procedure are been done on bringing him back to India.