Investigators are probing what appears to be a series of letter of credit (L/C) scams at banks in India.

News of the scams has damaged confidence so much in certain banks that customers have withdrawn large amounts of their deposits.

Confession

One investigation includes a probe into a suspected L/C scam that had such a negative impact on the Baroda Peoples Cooperative Bank (BPCB). Reports suggest that Chiman Sathi, a former chairman of the Charotar Cooperative Bank, signed fake L/Cs and subsequently encashed them with BPCB.

Sathi has reportedly confessed his involvement to the police but investigators have yet to see documentation that they believe will reveal the extent of this and possibly other suspected L/C scams.

Thorough check

Consequently the investigators are embarking on a thorough check of BPCB's records. They say that the types of scams under investigation would probably require the complicity of bank staff authorised to sign the documentation required for the fake L/Cs to be encashed.

BPCP transactions for the last three years have reportedly been taken into possession by the investigators who want to present documentary evidence of the scam in court.

Lost documents?

It seems however that some of the original L/Cs the investigators want to obtain are not where Sathi apparently thought they were.

The police reportedly took Sathi to a branch of BPCB to search for the originals but failed to find them. Sathi is on remand and is said to have provided investigators with several leads.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.