A bank CEO is declared not “fit & proper”
RBI passes strictures. Bank exits. A fund goes to IIT and offers the highest salary in history of IIT:
But the custodian and NBFC are doing business as usual. But who is the custodian linked to. To the bank who is gone. Or to the NBFC. Or to their proxy bank.
What if the custodian starts transferring securities from one account to another. A shareholder with a Rs 10,000 portfolio gets details in his AIS form. But someone with a Rs 100,000 crore portfolio leaves no trace. No KyC. Jane Street has a promoter who no one has ever seen.
If an average salaried man doesn’t update his KYC, his account is frozen. But who checks the KYC of the bank.
But there is a bigger one. That of a custodian called Citibank NA and a NBFC called Citicorp Finance India Ltd.
Now what exactly is CFIL. It was supposedly a fully owned subsidiary of Citibank NA. And the custodian is an arm of Citibank NA. But now that the bank is gone, how does the custodian continue. How does it meet regulatory compliances? How is a foreign entity without an operational bank continuing as a custodian.
What no one knows is that magically – one Avco Finance Ltd of Chawri Bazaar, Delhi morphed into CFIL of Mumbai in 2014. Orders were quietly passed in courts and kept secret. They are missing online. Investees, borrowers had no inkling. Quietly demat accounts continued to have the same name. The CIN number of the holder was changed. The same way you correct a typo in a database. Quietly. Without a trace. Post dated cheques are banked. Cheques are by name, not by company number. Rs 10,000 crores in taxes were evaded.
The client list of Citibank NAs custodian arm is the best kept secret in the world. No one knows what it is. No one knows what happens inside a custodian.
It is here that securities move without a trace. Custodian clients of Citibank held bank accounts in Citibank. They do so now in HDFC. Custodians belong to banks. They are considered trustworthy. Inspections are rare.
The custodian can print its own paper shares. Of any company and get them dematerialised directly. Once dematerialised they stand in the name of the custodian. And below that no one knows how they are transferred. 70% of all capital in AIFs goes into real estate. It does so to bypass controls on foreign ownership of assets.
But the entire real estate bubble is an unholy nexus.
It is the nexus between one dominant private bank, one custodian and ….. one innocent professionally managed, board run, promoterless entity called NSE which almost slipped into the hands of this nexus. Till the nation decided to fix it.
It is a saga.
Who is Jane Street ? Who owns HDFC?
NSE shareholder kyc will answer some.