NISHKA Sept 2014 Volume V Issue 51

NISHKA September 2014, Volume V, Issue 51

A FINANCIAL NEWSLETTER

ANTI-MONEY LAUNDERING

Christ University Institute of Management, Kengeri Campus

NISHKA Sept 2014 Volume V Issue 51

2

In this newsletter

NISHKA Sept 2014 Volume V Issue 51

3

Introduction to Anti-Money Laundering

Sudeshna Bhattacharya, F1 & Purnima Singh, F2

‘Hawala’ or Money Laundering has become

synonymous terms for Black Money transactions in

our country. There are scores of cases where it has

been found that banks had a nexus and was actively

involved in money laundering. Money Laundering is

not just used as a vehicle to stash black money but it

also has repercussions like, finding its way to financ-

ing terrorism. The government has been pro-active

in this regard to stop money laundering; it has come

up with Anti-Money Laundering Act, 2005 which

collaborates with Financial Action Task Force

(FATF), the inter-country organisation that combats

money laundering. It is an initiative of the G-7 coun-

tries.

The standards have been the international

benchmark for Anti-Money Laundering Act, 2005

and it helps to combat the financing of terrorism by

the regulatory authorities. It is necessary for the

banks, financial institutions and NBFCs to comply

with these standards for international financial rela-

tionship. The ‘Hawala’ Mechanism facilitates trans-

ferring out of the country and hiding unaccounted

wealth. Black money refers to funds earned, on

which taxes have not been paid and hence unac-

counted. Black money is earned through legally or

illegally traded goods or services while White mon-

ey is the money earned through legal means and on

which taxes have been paid.

The different stages of money laundering are as fol-

lows:

Placement: The first stage is about the physical dis-

posal of cash. It introduces illegal profits of the laun-

derer into the financial system. This placement is

accomplished by depositing the cash in domestic

banks or in other types of formal and informal insti-

tutions.

Layering: The Second stage in money laundering is

layering. It engages a series of conversions or move-

ments of the funds to distance them from their

source or origin. The funds might be channelized

through the purchase and sale of investment instru-

ments such as bonds, stocks, and traveller’s checks

or the launderer might deposit the funds through a

series of accounts at various banks across the globe,

particularly to those jurisdictions that do not cooper-

ate in anti-money laundering investigations.

Integration: In this stage the funds are returned to

the legitimate economy for later extraction. Exam-

ples include investing in a company, purchasing real

estate, luxury goods, etc.

The launderer makes the ill-gotten wealth

appear as it appear to have been legally earned and

accomplishes integration of the “cleaned” money

into the economy.

https://www.moneylaundering.ca/public/

law/3_stages_ML.php

NISHKA Sept 2014 Volume V Issue 51

4

Case Analysis: M/S Chinubhai Patel & Co.

Aswathy Edison, F1

In 1995, M/s Chinubhai Patel & Co. was syn-

onymous with the money laundering operation con-

ducted by Directorate of Revenue Intelligence

(DRI), which revealed a number of fictitious ac-

counts opened in banks by individuals. Further in-

vestigations conducted opened up the major role

played by Indian banks in such illegal transactions.

At a Glance:

M/s Chinubhai Patel & Co. was the name of

the fictitious bank account opened in South Indian

Bank’s Nariman Point Branch, Mumbai. The bank

account was opened in 1994 by the then bank man-

ager Mr. Kasturi Rangan. The bank created the ac-

count without obtaining and authenticating the ac-

countholder or account operator’s photograph.

What happened?

This account was utilized for depositing cash

of Rupees 387,379,000 and from his account; US $

12,048,650 was remitted in favour of M/s R.P. Im-

ports and Exports, Hong Kong. The remittances

were made on the basis of fraudulent documents.

Further investigations conducted by the Directorate

of Revenue Intelligence (DRI) in India and abroad,

revealed that four more firms have been operating

their accounts in a similar manner in the South Indi-

an Bank Ltd., and these firms were identified as M/s

Rakesh International, M/s R.M. International, M/s

P.M. International and M/s DeePee International.

These firms were also found to be fictitious and not

existing at the given address. They were operating

the account with the said bank since June 1992.

Through this account, an amount equivalent to US $

80 million (Rupees 2,500 million) were remitted

from India to Hong Kong.

The people associated with the act were Mr.

Rajesh Mehta and Mr. Prakash who used this ac-

count to siphon off funds in foreign exchange to

countries such as Dubai, Singapore and Hong Kong

with the help of pseudo documents which resulted in

a foreign exchange loss to India estimated at Rupees

2,500 million.

The further investigations conducted by For-

eign Exchange Enforcement Directorate(ED) re-

vealed that these illegal transactions occurred in

number of banks, one of them being United Com-

mercial Bank, Bombay. During the period 1991-95,

remittances amounting to Rupees 5,467.8 million

had been made through 12 different banks.

In 1990’s, there was a money laundering

league operating with the help of middlemen who

appointed front persons to open fictitious bank ac-

counts for the purpose of depositing cash and receiv-

ing pay orders from other banks. This was also uti-

lized to reward bank officials who were aware of the

transactions. Fraudulent Documents such as custom-

er Invoice, Bills of Entry, Packing Lists etc., were

created to show that imports had taken place and

funds were required to be remitted from the accounts

to the fictitious exporting countries such as Hong

Kong. To obtain the remittances from India, ficti-

tious accounts were also opened in banks of Hong

Kong. 33 people who were associated with the

league were arrested during February 1996 to June

1998.

Despite the measures taken by the Govern-

ment of India in the form of Prevention of Money

Laundering Act, 2002, money laundering leagues

still thrive in the country. Though, India has been

compliant with the global intergovernmental body

Financial Action Task Force (FATF) recommenda-

tions in combating the problem of money launder-

ing, the country still hasn’t fully been able to pre-

vent the problem.

When we think of Switzerland, besides their

chocolates and watches, Indians could relate to the

huge piles of black money believed to be stashed in

the accounts which is yet to be recovered. So, let us

be optimistic about our Swiss counterparts who will

co-operate with India and return the black money to

India.

References:

http://www.taxindiaonline.com/RC2/

print_story.php?newsid=2600

NISHKA Sept 2014 Volume V Issue 51

5

Case Analysis: Ketan Parekh Scam (2001)

Challapalli Kalyana Karthik, F2 and Niharika

Shadra, F1

Money laundering is the conversion of ille-

gitimate money into superficially legitimate assets

or money. Money from crimes such as extortion,

terrorism & the like is “dirty money” which is

“cleaned” to supposedly appear to arise from non-

criminal activities. The global financial system as a

whole has been striving hard to curb money laun-

dering by putting in place, a number of legal pro-

cesses. Instances of banks being fined by RBI or US

Federal Reserve have sharply risen over the past

few years. A number of KYC norms and adherences

are strictly followed, but loopholes still exist and

money laundering is still as common.

AML (Anti-Money Laundering) is a system

in place to reduce the money laundering activities.

Out of 140 countries, India has been ranked 93rd

and 70th in 2012 and 2013 respectively with a score

of 6.05 in 2012 and 5.95 in 2013, as compared to

Norway, which has a score of 2.36 and ranks No. 1

in the Anti-Money Laundering (AML) Basel Index

2013. This clearly indicates the importance, we

need to accord to AML norms in India.

About the Case:

All over world investment in ICE

(Information Technology, Communication and En-

tertainment) shares was the trend. Ketan Parekh col-

luded with promoters of the new economy (ICE)

shares and changed the complexion of the market

by buying stock known as K-10 scrip. He succeeded

in lifting scrips such as HFCL, Satyam and Global

to international P/E levels.

Parekh’s modus operandi was to route or-

ders through his three broking outfits and 40 satel-

lite brokers. He had contacts with brokers in Kolka-

ta and Ahmedabad, who were rewarded with

‘Badla’ payments. His sources of funds were Non-

Resident Indians (NRIs) and the new private sector

banks who accepted shares as collateral. He would

pledge the shares with banks as collateral when the

share prices were high.

Mutual funds and foreign institutional inves-

tors by investing heavily in technology stocks

helped K-10 scrip to rise high. He placed shares of

Satyam at a premium of Rs 1,000 with UTI and the

shares of HFCL for Rs 1,400 with mutual funds and

foreign institutional investors. Parekh would in-

crease the liquidity of stock when there was a strong

demand or he himself would buy aggressively if

one of the portfolio stocks fell.

The Bull Run started in May 1999 and con-

tinued up until November 1999 when Parekh started

his first major round of trading aggressively in

HFCL, Global, Satyam, and Zee scrips. Sensex rose

from 3,378 to 4,491 points. Sensex peaked to 6,100

before it started falling due to a global meltdown in

ICE shares. There was a sharp decline in prices due

to factors such as global economic slowdown, sig-

nificant market capitalization erosion at NASDAQ

and other leading stock exchanges. The sudden

steep fall in prices of these scrips resulted in a huge

depletion in the margins of shares that were placed

as securities with the banks. Consequently the

banks were obliged to ask Parekh and his associates

to either pledge more shares as collateral or return

some of the borrowed money, and on the other

hand, they were driven to prop up the prices by

pumping more money into the capital market. This

resulted in a financial crunch for some major bull

operators, which led to disputes in the Kolkata

(Calcutta) Stock Exchange (CSE). The crisis snow-

balled as the Kolkata brokers took more long posi-

tions than Parekh. Trading at Kolkata was 90 per

cent unofficial. It was a cash ‘Badla’ market where

Rupees 1,500-2,000 crore was rolled every month at

21-30percent. As the circumstances developed,

‘Badla’ rates shot up to 80 per cent at the Kolkata

Stock Exchange. So, Parekh defaulted on payments

NISHKA Sept 2014 Volume V Issue 51

6

to Kolkata brokers which resulted in a payment crisis between March 12 to17, 2001. Seventy CSE brokers

defaulted as the exchange plunged into crisis. The bear cartel on BSE, which was hammering the market

with inside information was caught red handed by SEBI who suspended all the seven members from the

BSE governing board.

Ketan Parekh desperately borrowed huge sums from the Ahmedabad based Madhavpura Mercantile

Cooperative Bank (MMCB). The bank issued pay orders running into Crores of Rupees without receiving

cash payment or collateral from Parekh. Pay orders are instruments whereby the issuing branch of a bank

orders another branch of the same bank to pay the stated amount to the named payee. The issuing branch of

the bank collect cash up front and hence have full collateral. Hence, the discounting bank is sure of collec-

tion. As Parekh colluded with Ramesh Parekh

the chairman of MMCB, the latter issued Pay

Orders without having the balance in the bank’s

accounts. The Bank of India (BOI) discounted

Rupees 137 crores worth of Pay Orders which

bounced. Ketan Parekh paid only Rupees 7

crores and BOI went to a criminal court against

him. The Reserve bank specifically prohibits co-

operative banks to invest in the stock market or

to lend to stock brokers. However, the latter are

free to lend to individuals against a pledge of

shares up to Rupees 10 lakh per borrower if the

shares are in a physical form and up to Rupees 20 lakh if they are in dematerialized form. MMCB flouted

the norms of the Reserve Bank to earn higher rates of return.

Ketan Parekh took money from the NRIs and the private banks which lent money against shares

and MMCB helped Ketan Parekh and all the NRIs to clean the dirty money so that they can claim it to be

White.

http://articles.economictimes.indiatimes.com/2009-01-24/news/29403716_1_satyam-fraud-audit-price-

waterhouse,

http://articles.economictimes.indiatimes.com/keyword/ketan-parekh/recent/3

NISHKA Sept 2014 Volume V Issue 51

7

Operation Red Spider by Co-

brapost

Niken Jain, F2

Cobrapost claimed to have unearthed a

vast, nationwide money laundering racket being

run by three leading private sector banks of India,

HDFC Bank, ICICI Bank and Axis Bank.

Facts of the Case:

The investigation found that the banks and

their managements systematically and deliberately

violated several provisions of the Income Tax Act,

FEMA, RBI regulations, KYC norms, the Banking

Regulation and Prevention of Money laundering

Act (PMLA) with utter disregard to the conse-

quences, driven by their desire to boost cheap de-

posits and reap higher profits.

Cobrapost captured the huge money laun-

dering racket being run by these banks on video

tapes which were secretly filmed. These tapes

showed that money laundering services were

openly offered to even walk-in customers who

wish to launder their illicit money.

How did it come out?

Reporters at Cobrapost walked in to banks

and asked the bank officials if they could help

launder a huge sum of money belonging to politi-

cians and, surprisingly found that employees ac-

cepted those brazen offers.

How do the banks do it?

You must be wondering how a bank can

indulge in such an activity with so much of strin-

gent norms put in place by the RBI on banking

industry. Following are a few of the ways suggest-

ed by the bank officials:

Accept huge amounts of cash and invest it in

insurance products and gold.

Open an account to route the cash into vari-

ous investment schemes of the bank and do

it even without the mandatory PAN card or

adhering to the KYC norms laid down by

RBI.

Split the money into tranches (transaction

value than Rupees 49,999) to get it into the

banking system without being detected.

Use ‘Benami’ accounts to facilitate the con-

version of black money.

Use accounts of other customers to channel-

ize the black money into the system for a

fee.

Get demand drafts made for the client either

from their own banks or from other banks to

facilitate investment without it showing up

in the client’s account. They will keep the

identity of the investor/depositor secret.

Open multiple accounts and close them at

will to facilitate the investment of black

money.

Invest black money in multiple instruments

in the names of different individuals, not

necessarily hailing from the same family.

Allot lockers for the safekeeping of the ille-

gitimate cash, including special large size

lockers to accommodate crores of Rupees of

hard cash.

Bank officials were known to have personal-

ly visiting residence of clients to collect un-

accounted or ill-gotten money which were to

be later laundered. It was reported that they

even took along with them currency count-

ing machines.

Use Form 60 to deposit the illegitimate cash

into accounts with no PAN and later route

monies so deposited into investments.

Operation Red Spider made it clear that the

RBI, the IT Department, the ED and various other

institutions entrusted under the law to keep a

watch on the banks have been inefficient in un-

earthing the misconduct, claimed Cobrapost.

RBI did an investigation and found that trans-

gressions found were operational in nature with

employees not adhering to norms and guidelines.

It concluded that current KYC norms and AML

guidelines were robust and does not need any revi-

sions. RBI for now has fined the banks but what

remains to be seen is the banks follow the guide-

lines and be more careful in future.

NISHKA Sept 2014 Volume V Issue 51

8

RBI Column

Pawanpreet Kaur, F2

RBI’s liquidity management triggers volatility: The Reserve Bank of India has created more

volatility in the money market than reducing it, making some believe, that it is tightening of interest

rate by stealth. Interbank rates which are supposed to be closer to the policy rates has gone widely off

the mark in the past three months. Overnight rates should have been between 8.20% and 7.80% in-

stead of 9.16% and 7.4%. Addressing this problem being faced by all the banks in India, RBI governor

said, “RBI wanted banks to do better forecasting for funds, cut the funds available under LAF to

0.25% of total deposits, from an unlimited amount”. Though RBI is planning to sell bonds which will

reduce liquidity in the system and not releasing funds through Repo agreement to compensate through

reducing export refinancing, this action in spite of lowering down liquidity crunch is confusing the

system.

RBI’s initiative to be lenient while licensing small banks: Even after RBI’s fir st attempt in giv-

ing differentiated licenses for small banks does not hold out many hopes for scores of aspirants. The

rules and policies include:

Operational area of small banks will be restricted to contiguous districts and expansion plans for

initial three years would need prior approval of RBI.

Minimum capital of Rupees 100 crore is required to start small banks and involves more risks

for the new entrant.

Professionals with 10 years of banking/finance experience can set up a small bank.

NBFCs, MFIs, Local area banks can convert themselves into small banks.

Small banks to follow all banking norms, including CRR and SLR maintenance.

Minimum 50% loans should be Rupees 2.5 Million or less.

Promoter’s initial contribution to be 40% of capital and cannot exit or sell his share before 5

years.

RBI’s plan to end lazy banking: RBI governor Dr Raghuram Rajan seems to have made a be-

ginning to end lazy banking in India. Reducing SLR by 100 basis points (22%) is an indication:

More lending to productive sectors of the economy.

Reduction in SLR will be compensated by payment banks as they will grow in size.

Meeting the fiscal deficit target of 4.1% of GDP. It will be done when funds with government

will be reduced.

Unproductive banks will be penalised by putting an end to them.

RBI’s step to put restriction on wilful defaulter from investing in capital market:

The RBI has forwarded a proposal to SEBI suggesting barring wilful defaulters of bank loans from

raising funds through capital markets. RBI will be sharing details of these defaulters on real time ba-

sis. Information about wilful defaulters is shared with SEBI and CIBIL, and is inviting other agencies

to share the information to bring more credibility and efficiency in the market.

http://www.rbi.org.in/scripts/bs_pressreleasedisplay.aspx

NISHKA Sept 2014 Volume V Issue 51

9

Corporate Column

Sai Nanthini R.K, F2

To gain insights on Anti-Money Laundering in India, we interviewed Mr. Arthanari, Retd.

Bank Manager, Canara Bank, Chennai.

1. What is the Prevention of Money Laundering Act?

A: The Prevention of Money Launder ing Act, 2002 (PMLA) forms the core of the legal frame-

work put in place by India to combat money laundering. This came into force in July 2005. This Act

imposes obligation on banking companies, financial institutions and intermediaries to verify identity

of clients, maintain records and furnish information to the designated government agency. It defines

money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of

crime. It makes it obligatory for all intermediaries including banks, HFCs to follow 'Know Your Cus-

tomer' norms which basically defines the customer identification process. As per the KYC, intermedi-

aries have to collect documents before entering into any transaction with the customers. This process

is basically to know the true identity, the source from where the funds have been brought, nature of

customer's occupation or business, etc.

2. What is the biggest challenge in complying with AML regulations?

A: The challenges are faced in three phases: Implementation, Interpretation and Repor ting. In

each phase the role of the management differs which actually shows the level of difficulty.

These challenges may be due to legacy data or operational difficulties, and hence, designing and exe-

cuting an effective implementation program remains the biggest impediment. Perceptions of the mid-

dle management do matter in this. To meet these challenges, all areas of AML function require an

equal focus. The budget has to be divided proportionately on activities such as training, technology

and operations.

3. What are the key operational challenges that every organisation faces with respect to AML?

A: Few common operational challenges are: Changing regulations in AML

infrastructure and technology, skilled staff, no standardized process for complying.

When we closely look at it, AML has not reached the level of stability compared to normal operation-

al process, where procedures are strictly codified and concerned people are fully trained to follow

them.

4. How does PMLA helps in combating financing of illegal activity?

A: India has consistently maintained a robust AML system. Our str ict foreign -exchange laws

and transaction reporting requirements, together with the banking industry’s KYC policy, make it dif-

ficult for criminals to use banks or other financial institutions to launder money. Large portions of

illegal proceeds are laundered through the alternative remittance system known as ‘Havala’.

Under the ‘Havala’ system, individuals transfer value from one location to another, often without the

actual movement of currency. This is why, many Indians do not trust banks and we prefer to avoid

lengthy paperwork. But, ‘Havala’ dealers provide the same remittance service as a bank with little or

sometimes no documentation and at rates less than those charged by banks.

To prevent this, the Bill was amended in 2002. This legislation criminalizes money laundering, es-

tablished fines and sentences for money laundering offenses, imposes reporting and recordkeeping

NISHKA Sept 2014 Volume V Issue 51

10

Finance Buzz

Vyom Goel, F2

Racketeering: It r efers to a cr iminal activity that is performed to benefit an organization, such

as a crime syndicate. Examples include Money Laundering, Loan Sharking, Obstruction of Justice and

Bribery.

Black Economy: The segment of a country's economic activity that is der ived from sources that

fall outside the country's rules and regulations regarding commerce. The activities can be either legal

or illegal depending on what goods and/or services are involved.

Perpetrator Walk: A slang term that descr ibes the practice sometimes employed by law enforce-

ment authorities, notably in the U.S., of parading an arrested suspect in public, with members of the

media usually in attendance. The alleged suspect is usually a white-collar or high-profile criminal.

Suspicious Activity Report (SAR): Suspicious Activity Repor ts can cover almost any activity that

is out of the ordinary, if that activity gives rise to a suspicion that the account holder is attempting to

hide something or avoid reporting under the Bank Secrecy Act (BSA). The Indian version of SAR is

Suspicious

Financial Crimes Enforcement Network (FinCEN): A network administered by the United

States Department of Treasury whose goal is to prevent and punish criminals and criminal networks

that participate in money laundering.

Wire Fraud: A situation where a person concocts a scheme to defraud or obtain money based on

false representation or promises. This criminal act is done using electronic communications or an inter-

state communications facility.

NISHKA Sept 2014 Volume V Issue 51

11

Market Round-up K.Alekhya, F2 & B. Suma Sravya, F1

Public sector banks' NPAs have piled up enormously and soared to a stagger ing Rupees 25,809

crore for the financial year ended March 31 pushing the total gross NPA ratio to 4.03 per cent in 2013

-14 from 3.42 per cent in 2012-13 and 2.94 per cent in 2011- 12- 02/08/2014 (BS).

No change in interest rates as RBI looks ahead: Reduced SLR by half-a-percentage point to 22%

to free up funds of about Rupees 40,000 crore in the banking system, given its total deposit base of

about Rupees 80 trillion. - 05/08/2014 (ET).

FIPB clears 14 FDI proposals worth Rupees 1,528 Crores: Of the proposals approved, pharma

company Laurus Labs will invest Rupees 600 Crores; ACME - Rupees 275 Crores; Sinclair Hotels -

Rupees 41.52 Crores and Golden Agri Resources (India) Rupees 485.9 Crores - 06/08/2014 (ET).

SEBI clears norms for Real Estate Investment Trusts: To boost the real estate and infrastruc-

ture sector with inflows of over US $20 Billion investment from both foreign and domestic investors,

SEBI on Sunday, approved the SEBI (Real Estate Investment Trusts) Regulations, 2014, and SEBI

(Infrastructure Investment Trusts) Regulations, 2014- 11/08/2014 (The Hindu).

RBI to transfer Rupees 52,679 Crores surplus profit to government: This amount would provide

some help to the government, which proposes to bring down the fiscal deficit to 4.1 per cent of GDP

this fiscal from 4.5 per cent last year - 11/08/2014 (BS).

Factory output slips to 3.4 percent in June: Showing signs of sluggishness in the economy,

growth rate of industrial production slowed to 3.4 per cent in June, as against 5 per cent in May, main-

ly due to lower output of consumer goods - 12/08/2014 (ET).

No foreign equity in multi-brand retail. Narendra Modi's government will not permit foreign

equity in multi-brand retail trade, which was an assurance in the party's election manifesto and as per

the extant FDI policy, FDI up to 100 percent is permitted in single brand retail trading. The present

draft of the policy does not permit retail trading in any form, by means of e-commerce, for companies

with FDI engaged in the activity of single/multi brand retail trading - 13/08/2014(BS).

Trade deficit rises to $12.22 Billion as July exports growth slows down: Expor ts growth slipped

to 7.33 per cent in July after witnessing a growth of 10.22 per cent and 12.4 per cent respectively in

June and May. Gems and jewellery and electronics continue to be a cause of concern as their negative

growth is pulling down overall exports growth - 14/08/2014(ET).

US Immigration Bill is all for significantly cutting down on outsourcing of work for cer tain

kinds of visas that were mostly used by Indian firms and professionals. If the Bill becomes a law, then

India's GDP could be adversely impacted by about US $30 billion a year. Direct impact will be, 10

million Indian IT Professionals domestically and 500,000 in the US will no longer have any work -

15/08/2014(BS).

FIIs pull out Rupees 5,300 Crores from bonds so far in August from the Indian debt market.

Foreign investors were gross buyers of debt securities worth Rupees 9,175 crore till August 14, and

sellers to the tune of Rupees 14,448 Crores - a net outflow of Rupees 5,273 Crores. There are several

reasons such as geo-political unrest in Ukraine, Iraq and Gaza along with global economic issues like

the defaults in Argentina and Portugal, and the recent SLR (Statutory Liquidity Ratio) cut by the Re-

serve Bank of India (RBI) -18/08/2014 (ET).

NISHKA Sept 2014 Volume V Issue 51

12

Stock Market Analysis

Sooraj Kumar, F1

Sensex crossed 27000 points in August-September from 25894.97 points in July, 2014. Stock

markets averaged 6329.06 Index points from the time of inception till 2014, reaching an all-time high

of 27000 points. Since July 2014 the monthly growth has been 2.87%. Cautious sentiment may pre-

vail as the Supreme Court will decide the fate of coal blocks.

Improved performance of mining, manufacturing and services sector pushed India's economic

growth rate to two-and-half year high of 5.7 per cent in the April-June quarter, a development which

the Finance Ministry expects to continue for rest of the fiscal. But, focus will largely shift on the Su-

preme Court’s verdict. Historically, September has been a weak month for equity markets. But, Dalal

Street participants seem to be thinking otherwise this year. As the September contracts take the center

stage on expiry of the August contracts on Thursday, traders are sitting on bullish bets on Nifty fu-

tures. Stock futures of technology, pharma, oil & gas and automobile sectors have also seen a rollover

of long positions to the September series from August.

The top gainers for the month of august are Bharat Petroleum (20.33%), M&M (20.07%), Tata Mo-

tors (19.32%), Godrej Consumer Products (17.49%), Cipla (16.23%) followed by Nestle India, Dabur

India, HPCL, etc. The top Losers for the month are Jai Prakash associates (21.66%), Reliance Power

(17.66%), Adani Power (14.84%), IDBI Bank Ltd (14.78%) followed by Unitech, Jindal Steel and

Power, Reliance Communication and others.

Stock of the Month - Bharat Petroleum

Face Value: Rupees 10

Traded Volume (Shares): 33, 87,252

Traded Value (Lacs of Rupees): 23,496

Market Cap (Lacs of Rupees): 17,942

NISHKA Sept 2014 Volume V Issue 51

13

Economic Rollers

Simmy Kumari, F2

Source: Finance Ministry, Office of Economic Advisory, HDFC Securities Report, Ministry Of Commerce,

RBI, http://www.tradingeconomics.com/india/

Rates Rates as on 1st August,

2013

Rates as on 15th August,

2014

Repo Rate 7.25% 8%

Reverse Repo Rate 6.25% 7%

CRR 4% 4%

SLR 23% 22%

MSF 10.25% 9%

Base Rate 9.70/10.25% 10.00/10.25%

Call Money Rate (Weighted average) 9.30% 7.97%

91 days T-Bill (Primary) Yield 10.92% 8.65%

364-Day Treasury Bill (Primary) Yield 9.88% 8.74%

10 years Govt. Securities Yield 7.97% 8.65%

Bank Rate 10.25% 9%

CBLO(weighted average) 8.50% 9.19%

Savings Deposit Rate 4.00% 4.00%

Forward Premia of US$ 1-month 10.01% 8.77%

NISHKA Sept 2014 Volume V Issue 51

14

Finance Quiz

Srinivas Rahul Chaganti, F2

1. The provisions of PMLA (Prevention of Money laundering Act, 2002)

have come into effect from __________.

2. Which Bank announces EMI facility on debit cards, which ties up with

Samsung?

3. India signs MoU with_____________ to develop infra for semi high-

speed trains.

4. Who is the new CEO of Mahindra Retail who replaced K. Venkataraman?

5. _____ Power bought Lanco Infratech’s Udipi power plant for 6000 crores.

6. Who is the Indian origin mathematician who has been awarded prestig-

ious 2014 Field Medal at International Mathematician Union (IMU)?

7. Tata-Singapore joint venture is branded as __________.

8. SEBI imposes 13 crore penalty on ____ for non-disclosure of diluted

earnings.

9. Which bank has been emerged as most valued bank in India with a brand

value of US $ 9.4 Billion?

10. _________Steel Ltd. India’s steel maker has agreed to buy Welspun Max

Steel for Rupees 1000 crore.

NISHKA Sept 2014 Volume V Issue 51

15

Photo-Find

Nilanjana Chatterjee, F2

1) 2)

3) 4)

5) 6)

NISHKA Sept 2014 Volume V Issue 51

16

Crossword

Samyuktha P Reddy, F2

Vertical:

1. ------------ confirmed Wednesday that it faces fresh US fines over alleged breaches in its anti-money laundering

systems, two years after it paid massive penalties for violating American sanctions.

2. A special anti-money laundering court here has attached assets worth over Rs 37.86 crore belonging to former

Karnataka minister and mining baron --------- and his wife in connection with an alleged multi-crore iron ore

mining scam.

3. US regulators are investigating Charles Schwab Corp and Bank of America Corp's -------brokerage over

whether they are doing enough to learn about their clients' identities, sources said, the latest sign a crackdown

on money laundering is expanding.

4. To safeguard Indian markets from money laundering risks, brokers and other intermediaries would need to

have designated director for ---------------- compliance by the end of this month.

5. ----- which has a score of 2.36 and ranks No. 1 in the Anti Money Laundering (AML) Basel Index 2013.

Horizontal:

6. In which year the Parliament of India passed an act called the Prevention of Money Laundering Act.

7. This type of money laundering is a process that disguises a legitimate source of funds that are to be used for

illegal purposes

8. In December 2012, ---- : paid a record $1.9 Billion fines for money-laundering hundreds of millions of dollars

for drug traffickers, terrorists and sanctioned governments such as Iran.The money-laundering occurred

throughout the 2000s.

9. ---- was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The bank it

finally came out was being used to fund criminals and dictators, the CIA of USA was using it to fund the Af-

ghan Mujahedeen and Contras. It was laundering proceeds from trafficking heroin grown in Pakistan-

Afghanistan, boosting the flow of narcotics to European and U.S markets.

10. Formed in 1989 by the G7 countries, the ---- is an intergovernmental body whose purpose is to develop and

promote an international response to combat money laundering.

1. 3. 2.

7.

8.

5.

9.

10.

4.

6.

NISHKA Sept 2014 Volume V Issue 51

17

Answers

Answers to Quiz:

1. 2005

2. ICICI

3. Czech Republic Railways

4. Prakash Wankankar

5. Adani

6. Manjul Bhargava

7. Vistara

8. RIL

9. HDFC

10. JSW

Answers to Crossword:

1. Standard Chartered

2. Gali Janardhana Reddy

3. Merrill Lynch

4. PMLA ( Prevention of Money Laundering

Act)

5. Norway

6. 2002

7. Reverse

8. HSBC

9. BCCI - The Bank of Credit and Commerce

International

10. FATF

ANSWERS TO PHOTO FIND:

1. Logo of Standard Chartered which has been in news recently for having

faced a hefty money laundering fine.

2. Jeffrey Preston "Jeff" Bezos, technology entrepreneur who has played a key

role in the growth of e-commerce as the founder and CEO of Amazon.com

3. Lloyd Craig Blankfein, CEO and Chairman of Goldman Sachs.

4. Manjul Bhargava, the first person of Indian or igin to win the Fields Medal,

which is awarded every four years to mathematicians who are 40 years old or

younger and is often described as a Nobel Prize for mathematics.

5. Logo of HSBC (Hongkong and Shanghai Banking Corporation), world's sec-

ond largest bank.

6. Arundhati Bhattacharya, the first woman to be the Chairperson of State

Bank of India. In 2014, she was listed as the 36th most powerful woman in

the world by Forbes.

NISHKA Sept 2014 Volume V Issue 51

18

NISHKA TEAM

Nishka is a monthly finance newsletter brought by the students of the finance club of Christ University Institute of Management, Kengeri Campus. The idea behind coining this issue of the magazine is to establish a learning among the students, which helps them to gain an insight about the world of finance.

Faculty Coordinator

Prof Shrikanth Rao

Coordinators

Niharika Shadra, F1

Niken Jain, F2

Editors RBI Column Crossword

Gerorge P Job, F2 Pawanpreet Kaur, F2 Samyuktha P Reddy, F2 Neha Mishra, F2

Introduction Finance Buzz Quiz

Upasana Gurung, F1 Vyom Goel, F2 Rahul Srinivas, F2 Srijita Mukherjee, F2

Article Coordinators Market Round Up Photo Find

Aswathy Edison, F1 B.S Sravya, F1 Nilanjana Chatterjee, F2 Sudeshna Bhattacharya, F2 Katepalli Alekhya, F2

Article Writing by Economic Rollers Corporate Interview

Kalyan Karthik, F2 Simmy Kumari, F2 Sai Nanthini R K, F2 Purnima Singh, F2

Stock Analysis Designing

Sooraj Kumar, F1 Sharan Kumar G, F2

CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT, KENGERI CAMPUS

Please mail your valuable feedback/reviews to nishka@mba.christuniversity.in

(for private circulation only)