In this article, ING Vysya Bank has been identified as the main culprit in a currency conversion scam perpetrated by an Indian bank. However an investigation shows that ING Vysya Bank did no wrong and was not involved in the money transfer or the currency conversion, but simply received the funds after the transfer was processed by its official correspondent Standard Chartered Bank. The real culprits are the Royal Bank of Canada and Standard Chartered Bank. In a letter to the beneficiary the Royal Bank has admitted that it did not follow the sender’s instruction and sent the funds to Standard Chartered Bank instead of ING Vysya Bank. Standard Chartered Bank then took the opportunity to manipulate the dollar to rupee exchange rate to its own advantage and slap an exorbitant service fee on the beneficiary. The result was that the beneficiary was shorted by more than Rs 4000 in the transaction. The moral of the story is that NRIs in Canada sending money to India should avoid using the Royal Bank of Canada or other Canadian banks and instead use a money transfer company like Remit2India for their money transfer needs. – Editor
This correspondent has a friend in Tiruvannamalai, an elderly sadhu who writes books on Indian history and teaches English to school boys. He is a bhikhari sadhu and lives on alms, accepting whatever the devotees of Arunachaleswar and Apeethakutchambal choose to give him. Some of these devotees are foreigners from Europe and America and they occasionally send him money by wire transfer or international bankers draft. In order to receive these funds or cash the cheques he has an account with the local branch of ING Vysya Bank in Sannidhi Street.
ING Bank, called ING Vysya Bank in India, is the largest banking company in the world by revenue. This fact amuses my friend very much. He is after all a beggar of no account in the world of high finance, but, as he says, he has an account in the world of high finance. He hopes and prays that he may also have an account at Sri Arunachaleshwar’s bank in Swarga. But that is a different story.
Ten days ago my friend was sent a wire transfer from Toronto through the Royal Bank of Canada. The sender, an old friend of his who had made these transfers before, also sent him the transfer details. These details were passed on to his bank and he asked them to inform him when the funds had arrived and had been credited to his account.
After a few days when he did not hear from the ING Vysya branch manager, he called the bank’s help line and learned that yes, the money had been credited to his account the day before. He asked for the amount of the transfer credited and was rather surprised by the bank’s reply: the amount, now in rupees, appeared to be short of the amount he had expected the transfer to yield.
He did some calculations, checked a number of currency exchange websites on the Internet, one of them associated with ING Bank, and came to the startling conclusion that he had been shorted in the exchange from Canadian dollar to Indian rupee by a little more than Rs 4000.
My friend immediately informed the ING Vysya Bank of the shortage in the proceeds of the wire transfer. He asked them to return the money that had been skimmed off the balance. He gave them one week to reply. After that he would lodge a complaint with the Reserve Bank of India and the Chief Executive Officer of ING Bank in Amsterdam, Jan Hommen. He then went off for medical treatment in Puducherry, which is what the transferred money was meant for in the first place.
When he returned from Puducherry a few days later, three ING Vysya Bank officials came to the door of his tiny rented room and offered an explanation for the shortage of Rs 4000 in the amount of the transfer credited to his account.
They told him with a completely straight face that the wire transfer had in fact been sent to Standard Chartered Bank, not to them, and that after changing the Canadian dollars to Indian rupees, Standard Chartered had sent the balance to ING Vysya Bank where it had been credited to his account.
The reason for the shortage according to the ING Vysya officials was unknown. Perhaps Standard Chartered had paid themselves Rs 4000 for the service of changing the funds from dollars to rupees. He should contact Standard Chartered himself and find out.
Now this is quite a good story for a bank to tell when they have been caught stealing money from one of their own valued customers. It is good because it involves an third party whom the customer does not know and cannot contact. The receiving bank stands exonerated of any crime and the customer must accept the loss with grace and good faith that his bank is telling the truth.
However ING Vysya Bank did not calculate that their valued customer, my friend , would fight back. He was a sadhu after all and sadhus are not supposed to care about money or have bank accounts. They are also not supposed to fight back even when the evil doer is a big international corporation. But my friend is made of sterner stuff. He values money as a force for good when managed properly and does not see why he should contribute to the inflated bonus packages of the bank’s executive sahibs when he can use the money himself to put a village boy into the local government arts college for a year.
So my friend asked the ING Vysya officials on his doorstep how a wire transfer sent specifically to their Chennai branch SWIFT address, VYSAINBBMAS, with the name of the Chennai branch and its street address in the SWIFT message, could be intercepted and hijacked by Standard Chartered Bank?
They replied that the wire transfer had been sent to Standard Chartered by by the Royal Bank of Canada itself who was responsible for making the transfer to India.
This turned out to be true. Though the funds had been sent to the ING Vysya SWIFT address as detailed above, not the Standard Chartered SWIFT address, the Royal Bank of Canada on its own initiative had sent the funds to Standard Chartered Bank. The Royal Bank had ignored the senders instructions. The Royal was the original wrong doer in the wire transfer procedure, though to this day it refuses to admit its mistake claiming that Standard Chartered Bank is a listed correspondent of ING Vysya Bank.
Standard Chartered Bank is indeed a listed correspondent of ING Vysya Bank though ING Vysya does not admit it.
The SWIFT code and money transfer system is trusted by all banks in the world and is supposed to be secure. At no time did Standard Chartered Bank come into the picture until the Royal Bank of Canada introduced it for reasons known only to itself. Perhaps the Royal Bank and Standard Chartered have made a back-room deal that should be investigated.
If we accept the ING Vysya story, then what the bank officials are saying is that the SWIFT wire transfer system is totally insecure and subject to the whims and fancies of the sending bank. In this case the sending bank was the Royal Bank of Canada who chose for reasons known only to itself, to send the money to Standard Chartered Bank though it was clearly marked for ING Vysya Bank.
This means that the thousands of NRIs who transfer funds to India through their various banks abroad using the SWIFT money transfer system, or more specifically using the ING Vysya SWIFT address, are liable to lose their funds or have the funds diverted to any bank, by any bank, at any time.
The question arises whether Standard Chartered Bank would skim off the proceeds of a wire transfer not its own if it had the opportunity to do so? The answer is yes, of course it would do so. Standard Chartered Bank in India has a notorious reputation for exploiting its customers in currency exchange transactions. It is a bank made of the union of two old colonial banks that have transformed themselves into a single neo-colonial bank. Their secret mantra is “Squeeze the customer! Squeeze the customer! Squeeze! Squeeze! Squeeze!”
The moral of this story is stay away from the foreign banks doing business in India. They appear to operate with impunity and are not accountable to their customers. If money has to be transferred to India, try one of the money transfer companies like Western Union or Remit2India. We cannot guarantee these systems are absolutely safe but they seem to be the better alternative to the money transfer services offered by ING Vysya or Standard Chartered banks today.
» Rishi Kumar is an independent journalist in Puducherry.
» See also “ING banker bonuses axed by people power”.
Filed under: banks, ethics, india, indian banks, international finance | Tagged: currency exchange, foreign banks in india, indian banks, ING, ing vysya bank, jan hommen, john w. peace, patrick flynn, peter elverding, peter sands, remit2india, reserve bank of india, royal bank of canada, shailendra bhandari, standard chartered bank, SWIFT, western union, wire transfers | 4 Comments »