Chennai: The exporter-victims who have suffered huge losses due to their banks indulging in illegal foreign currency ‘loot’ transactions are being forced by the banks to convert those losses as corporate loans so as to save the bank executives from blame for these scam-related losses, it is alleged.
“This is nothing but an attempt to cover up the scam of illegal foreign currency ‘loot’ derivative transactions and save the concerned bank banks arm Twisting Clients executives. In this process, the firms already hit badly by the scam will soon crumble under the unbearable burden of these fresh loans for no fault of theirs.
The customers resisting this conversion of derivates transaction losses into loans are being arm-twisted by the banks threatening to stop their accounts and classifying them as NPAs (non-performing assets). This is grossly unfair, unethical and illegal as it violates RBI norms,” said Raja M. Shanmugham, MD of Warsaw International at Tirupur.
He is also president of Forex Derivates Consumers Forum, which was launched in 2008 to get all the victim-firms under one umbrella for fighting the banks which had sold them what these firms allege were fraudulent foreign exchange derivative contracts involving currency which the exporter/importer was not concerned with and also, linking the exchange of exposed currency with unconnected currencies.
This scam triggered by some foreign banks led to huge losses to the collaborating Indian banks, which they passed on to the innocent clients. The losses are estimated to be in the range of Rs 30,000-50,000 crore and the scam was also believed to have led to the fall of the Indian rupee.
“This is nothing but an attempt to cover up the scam of illegal foreign currency ‘loot’ derivative transactions and save the concerned bank banks arm Twisting Clients executives. In this process, the firms already hit badly by the scam will soon crumble under the unbearable burden of these fresh loans for no fault of theirs.
The customers resisting this conversion of derivates transaction losses into loans are being arm-twisted by the banks threatening to stop their accounts and classifying them as NPAs (non-performing assets). This is grossly unfair, unethical and illegal as it violates RBI norms,” said Raja M. Shanmugham, MD of Warsaw International at Tirupur.
He is also president of Forex Derivates Consumers Forum, which was launched in 2008 to get all the victim-firms under one umbrella for fighting the banks which had sold them what these firms allege were fraudulent foreign exchange derivative contracts involving currency which the exporter/importer was not concerned with and also, linking the exchange of exposed currency with unconnected currencies.
This scam triggered by some foreign banks led to huge losses to the collaborating Indian banks, which they passed on to the innocent clients. The losses are estimated to be in the range of Rs 30,000-50,000 crore and the scam was also believed to have led to the fall of the Indian rupee.
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