Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup.

It was founded in 1812 as the City Bank of New York, later First National City Bank of New York. As of March 2010, Citigroup is the third largest bank holding company in the United States by total assets. It has retail banking operations in more than 100 countries and territories around the world. More than half of its offices i.e.1,400 are in the United States. Mostly its offices are in New York City, Chicago, Los Angeles, San Francisco Bay Area and Miami.

In India, Citi bank, established 108 years ago in Kolkata . It operates 42 full-service branches in 30 cities and over 450 ATMs across the country. In India, Citibank is present at 28 locations as of April 13, 2009.

It is also the largest taxpayer in India among international financial institutions.

The services offered by the bank are:

LOANS CREDIT CARDS SAVING ACCOUNTS MUTUAL FUNDS DEMAT SERVICES INSURANCE SERVICES ONLINE BILL-PAY PRE-PAID MOBILE RECHARGE INTERNET BANKING & ATMs CITIALERT statements on MOBILE PHONE

 Best Consumer Internet Bank 2009

and 2010 award winner Best International Trade Bank, 2009, 2010 Best Foreign Exchange Prime Broking Services, 2009 Best Investment Bank in India, 2010 No. 1 Savings Account & Home Loan Provider Amongst Foreign Banks, 2009 Best Foreign Investment Bank in India, 2009, 2008, 2007, 2006, 2005 & 2004

Winner of Most Trusted Foreign Bank, 2009 and Best Consumer Internet Bank 2009 and 2010 is in news for a dishonorable reason which is done by Shivraj Puri(accused), a banker and relationship manager of Citi bank Gurgaon branch.

Shivraj Puri was the relationship manager at Citibank Gurgaon branch who was involved in the Citibank scam in 2010. As per some clients and colleaagues he is very polite and wellmannered person.He had received a few awards at the national and international level from top bank officials before the scam was unearthed.

A relationship manager is allowed to issue a third-party cheque, in most cases, they need to be countersigned. But the second signatory often signs the cheque without much verification. Once the first person has signed, the other person signs it without much due-diligence.
A lot of this business is based on trust.

Shivraj Puri, a banker and relationship manager of Citi bank Gurgaon branch took all the investors and (financial) regulating authorities for a ride by creating a sham scheme by promising unusually high returns of 20 per cent thereby embezzling a mind bobbling Rs. 300-350 crore from 20 accounts of high-net worth clients (HNI). He then used to transfer the funds to a custodian account which later was found out to be an individual account opened by the name of some Mr.Premnath who was discovered to be Puris relative. Then this fund used to move to the accounts of puris relative which henceforth was used for stock trading by DEMAT accounts at the hands of brokerage houses like Religare, Bonanza, IIFL (etc.).

To win the trust of his alert victims, Puri showed a forged notification of market regulator Securities and Exchange Board of India(SEBI) for garnering funds from them. At Religare, he ran two accounts-one on his own name and the other one a joint account of him and his mother(deeksha puri). Trade worth 60-70 crore is done in these accounts since june 2009 (even Religare claims that they had alerted the fraud intelligence unit once the trading crossed 10 crore).

At Bonanza he had three demat accounts,one in his own name and the other two in the names of his relatives. In IIFL, he had two demat accounts,one in his name and the other one a joint account.
All these accounts have been frozen currently.

Apart from the returns promised, apparently a faked SEBI circular named a custodian account in the name of Premnath (grandfather of the accused) , the investors happily wrote cheques into that account. Shivraj Puri opened 78 accounts in his name and in the names of his grand parents, Premnath Puri and Sheela Premnath Puri and in the name of his mother, Deeksha Puri. All the three are co-accused along with Puri.

The accounts are with different financial institutions including banks and brokerage houses spread across Gurgaon, Delhi and Kolkata. Religare, Bonanza and India Infoline figure in the list. The banks include SBI, HDFC, Standard Chartered, PNB, Axis and ABN-Amro.

It was quite simple. Shivraj Puri asked clients to invest in schemes that were offering more than 20 per cent annual returns. He showed forged documents to prove these schemes were approved by Citibanks investment product committee and regulator. After obtaining the clients approval, he could have done two things. Either, he had got a blank cheque from the client and filled up the receivers name. Or, he had issued third-party cheques from the account of his clients Citibank account in his wifes and relatives names. The money was then transferred from these accounts to be invested through a brokerage firm.

It took one year for Citibank authorities to smell that there was something improper with such high value transactions apparently going through these accounts. The branch was offering a high return scheme with 20 percent return. Sanjeev Aggarwal(Victim), managing director of Helion Advisors, filed an FIR with the local police in december, alleging that he was cheated of his life's savings of Rs 32.43 crore in the fraud. The scam was unearthed when a customer cross checked Puri's offer with Citibank.

After the complaints by the Victims , Puri was arrested by Gurgaon Police.

The minimum investment of each investors ranged from Rs. 15 lakh and above. Police said Puri had initially even returned some of the money at 20 percent interest to win over their trust.

Puri , has tried his best to eliminate all pieces of evidence as much as he could before he surrendered before a city court which contains incriminating data.

Gurgaon police recover his iPad, which it believes has the details of his transactions and mails and could be helpful in unravelling more secrets of the accused contains crucial information and emails and even voice mail and SMS record .

Police also arrested a senior official of the Hero Group, Sanjay Gupta, in connection with the estimated Rs 300 crore Citibank fraud case. Gupta, who is the Associate Vice President (Accounts) of one of the Hero Group . Gupta was aware that Puri used fake letter and forged notification of market regulator Securities and Exchange Board of India for raising funds from his victim. He was believed to have received commissions worth Rs 20 crore from Puri for bringing in clients, including the Hero Group.

After the CITIBANKs multi-crore scam, the Reserve Bank is investigating the Rs 300 crore fraud in Citibank's Gurgaon branch, which saw diversion of depositors funds in stock markets. The fraud at the Citibank's Gurgaon branch, involving diversion of depositors money into the stock market, was uncovered. RBI Executive Director G Gopalakrishna said that soon a statement in this regard would be made.

Religare confirmed that Mr. Shivraj Puri (accused), was a client with Religare's broking business in his individual capacity since June 2009 and all Know Your Customer (KYC) formalities and other due diligence which is followed with regards to new account opening and client servicing, has been carried out and is complete as per prescribed regulatory and compliance norms.

But after this multi-crore scam,Religare said that they will cooperate and furnish all information, as and when required by investigating authorities on this matter.

A Securities and Exchange Board of India (SEBI) team from Mumbai assist the city police in the Citibank fraud case. The Economic Offences Wing (EOW) and Cyber Crime Wing has been helping Gurgaon police, along with State Bank of India officials, in the case involving huge investment by corporate entities and high networth individuals (HNI).

The psychological impact of the multi-crore scam of Citibank's Gurgaon branch on the market had a part to play in dragging down the market. "Banking and Non-Banking Financial Companies' (NBFCs) stocks were under pressure, primarily on rate hike fears and also in reaction to the Citibank scam. The biggest fall in Sensex in first week of January is not due to the reason of Citibank scam, it was just a psychological impact of investors.The downfalls in SENSEX was due to other reasons.

After this 300 crore Citibank scam, goodwill of the CITIBANK is adversely effected. After this scam, every investor will thinks thousand times to invest their money in this bank.

Investors will prefer Indian govt. banks like State Bank of India or other institutions.

Foreigners/NRIs will also go for other international banks.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said the multi-crore Citibank scam was not a regulatory failure, the RBI has begun investigating the Rs 300 crore fraud in the banks Gurgaon branch, which saw diversion of depositors funds in stock markets. Individual problems always crop up. But still that fraud can ever be ruled out. When it happens, they will move quickly and take corrective action.

According to Fitch rating agency, the Rs 300400-crore scam, will not impact the bank's short-term credit rating, but warned against waning investor confidence that could lead to client exits and impact profitability. Any erosion of investor's confidence could slow down growth or even reduce profits in this business, particularly if some of the existing clients choose to exit.

Fitch cautioned that though the CITIBANKs branch strong capital structure has capacity to absorb any loss,otherwise there could be adverse reputational impact of the fraud.
According to Fitch Rating agency, The final loss to the bank would likely be far higher than the capital allocation of estimated Rs 100 million for operational risk in the wealth management business.

CITIBANK authorities said that they are reconciling its accounts and working out a "fair compensation" for those customers affected by it. They are committed to safeguarding their customers legitimate interests.

Main Victims of the fraud include big names such as the promoters of the Hero Group (Rs 250-crore) and Helion Advisors Managing Director, Sanjeev Aggarwal (Rs 33crore).

The multi-crore CITIBANK SCAM force the govt. banks to take the cautions. PSBs have been looking to enter the wealth space to make sure their well-off customers stayed with them and not move away to private banks that offered services .There are some cautions.

wealth management division have a strong control system to prevent fraud.

Client education for scrutiny of details and investments is a must. Banks will need to see if there was a failure of controls (checks and balances) within the set-up.

The unfolding saga of the fraud by Citibank India employee, Shivraj Puri, is like all such scams, both sordid and unbelievable. All frauds are sordid or unbelievable.

The main victim Mr. Sanjeev Aggarwal ,one of those who has lost many crores has filed a suit claiming that Citibank was guilty of a systemic failure.

Bank clients should check periodically if their money is safe.

NRIs should also update their accounts.

every investor, big or small, has to do their own due diligence.

In the Citibank fraud case, the Gurgaon police is now likely to arrest Raghuraj Puri(father of the accused) whose anticipatory bail application has been cancelled by the Punjab and Haryana high court. The Gurgaon police is still questioning Citibank employees and investigating the complaints which have been filed by the high network investors. However, the high court gave temporary relief to Deeksha Puri, (Shiv Raj's mother), by granted anticipatory bail to Deeksha Puri till March 18. Shivraj Puri and co-accused Sanjay gupta are still in police custody,in bhondsi jail in Gurgaon.

This multi-crore CITIBANK SCAM has shocked the management of banks and institutions . Now every investor will think many times before investing his savings. As Risk is everywhere and it is uncertain , and these types of risks cannot be eliminated but can be reduced upto sum level because it is a matter of TRUST ,the business is based on TRUST.