The Reserve Bank of India (RBI) has requested
banks share details of their wealth management businesses following
the embezzlement of 4bn rupees ($56m) by a local Citi relationship
manager.
The banking regulator’s move suggests the
Indian government’s appetite to expand India’s booming wealth
industry could be cooling.
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The government-run RBI has asked selected
banks to clarify their wealth management policies, procedures and
the size of their businesses.
The client-RM relationship has come under
scrutiny as RBI warned that clients can fail to take basic
precautions or get complacent once they become too trusting of
their advisers.
The inquiry follows news that Citi
relationship manager, Shivraj Puri, allegedly duped a number of
high net worth clients into entering a fraudulent investment
scheme. He has been arrested by police, amid a widespread
investigation by authorities.
At Citi India, a spokesman said that it had initiated an
investigation into a certain set of suspicious transactions based
on documents forged by an employee involving a few accounts in the
Gurgaon branch.
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By GlobalData“We immediately reported the matter to all the
relevant regulatory and law enforcement authorities. Identified
suspicious transactions have been isolated and we are providing
full assistance to the authorities in their investigations,” his
statement said.
India PSBs wary of
entering wealth management
The Citi scam comes as public sector banks
(PSBs) in India plan to enter the wealth management business.
The State Bank of India (SBI) is considering
creating a separate company for private banking to manage the
wealth of the mass affluent segment in India.
