Bengaluru: 2 RBI officials arrested for currency exchange fraud

In a big blow to the central government, the Central Bureau of Investigation (CBI) on Saturday arrested two Reserve Bank of India (RBI) officials in Bengaluru for playing a part in currency conversion fraud cases. 

The latest arrests have raised questions on the role played by the central bank officials in currency exchange process. The two accused, who have been identified as Sadanand Naika, Senior Special Assistant and AK Kavin, Special Assistant of the RBI's cash department in Bengaluru, Times of India reported. 

The two accused would allegedly distribute the new Rs 2,000 and Rs 100 notes for a stipulated margin of Rs 4,000 per person per day (on a commission basis). The CBI said that the duo, along with some other unknown officials of the RBI were mandated the task of handling old notes, but gave away the new notes. Of the total amount, Rs 60.3 lakh was purposely exchanged over "just one counter," the Hindu reported.

This is not the first time that RBI officials have been arrested for alleged money exchange racket. Last week, Michael K, another RBI employee, working at the Issue Department of the RBI's regional office was arrested by the crime bureau. He is suspected to have facilitated exchange of Rs 1.5 crore in old currency. 

Commenting on the arrest of Michael K, Deputy RBI governor SS Mundra told the media that "let me clarify that it was a junior functionary of the RBI and it was reported by the investigating agency that he was recorded to be present in a bank branch where some suspected transaction was happening. Having known about that, the employee has been suspended. We have instituted investigation and due action would be taken once all the details are ascertained."

Ever since Prime Minister Narendra Modi announced the currency ban of Rs 500 and Rs 1000 notes on November 8, the Enforcement Directorate (ED) and the CBI have been conducting raids to nab people who are involved in illegal exchange of old and new currency.