In UPA’s summer of discontent, it continues to rain scams. The Central Bureau of Investigation (CBI) had unearthed a huge forex derivatives scam, pegged at Rs 32,000 crore which has been conveniently brushed under the carpet by the government for three years. On January 4, 2012, Parliament’s Public Accounts Committee (PAC) had sent a reminder to the Ministry of Finance, seeking an explanation on the alleged scam in selling forex derivatives to Indian companies. The ministry has failed to respond so far. In a letter dated September 29, 2011, the Department of Financial Services, Ministry of Finance, while forwarding the views of Reserve Bank of India and Indian Banks Association, had responded to a PAC question on action taken to recover the huge losses by saying: “The specific action does not come under the purview of the Reserve Bank of India.” Sources say the PAC, which admitted a private complaint in public interest to investigate the massive scam, was not satisfied with the response and asked Ministry of Finance to file an action taken report.
The story begins in 2008, when 19 banks violated RBI and Foreign Exchange Management Act (FEMA) guidelines and sold ‘engineered’ forex derivatives to Indian corporates, which resulted in huge losses to Indian investors and alleged gains to foreign-based banks. After almost three years, the RBI imposed a meagre total penalty of Rs 1.9 crore on the banks. Documents accessed by Express reveal a deliberate delay by the government in launching a probe into this scam.
The investigating agencies allege that RBI officials, working in tandem with unknown foreign entities and Indian banks, made intentional projections indicating that the rupee would strengthen against the dollar.