Shivraj Puri, the Citibank relationship manager accused of cheating investors of around Rs 200 crore, surrendered on Thursday, almost 48 hours after one of India's biggest banking frauds came to light

Citibank manager surrenders in court

Shivraj Puri, the Citibank relationship manager accused of cheating investors of around Rs 200 crore, surrendered on Thursday, almost 48 hours after one of India's biggest banking frauds came to light.

Puri was sent to police custody for seven days during which he would be questioned about the fraud targeting wealthy clients of the bank. Family members of Hero Group promoters, the Munjals, are among those whose money was swindled, a company board member said on condition of anonymity.

Of the accounts with Citibank, a few were in the name of Puri's close relatives, eight in the name of Norman Martins Pvt Ltd, which according to police, were controlled by Puri's relative Premnath. One account is in the name of Metcam Holdings Pvt Ltd. Police said three brokerage firms have come forward - Bonanza Portfolio, Religare Securities and Norman Martins Pvt Ltd.

"The clients believed Puri and invested money because of trust," said Gurgaon Police commissioner SS Deswal. "During the interrogation the police will trace the money trail."

Citibank lawyer Harish Malhotra said the bank had given all documents connected with the case to the police. According to a Citibank official who didn't want to be named, Puri forged letterheads of the capital market regulator Securities and Exchange Board of India and Citibank to sell the fraudulent scheme.

FIR registered by Gurgaon police on December 27 - based on a complaint by Citibank - stated that big-ticket transactions were noticed from a joint account (5011666247) that Puri opened in September 2009 with close relatives Premnath, Shaila Premnath and Diksha Puri as account holders. The bank's internal probe, the FIR said, revealed that funds were transferred from this account to a firm, G2S Management Consultants, and also to a clutch of other accounts.

That's the law

According to Reserve Bank of India (RBI) rules, any unusual activity has to be reported to the regulator through a "suspicious transaction report". Experts said that if it was established that Citibank did not adhere to the rules laid down by RBI, the bank could face regulatory problems.

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