File Image: IOL
File Image: IOL

Bank of Baroda exit - Is the Gupta net closing

By Kabelo Khumalo Time of article published Feb 13, 2018

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JOHANNESBURG - The Bank of Baroda (BoB) yesterday announced its exit from South Africa after months of legal wrangles with the Gupta group of companies.

BoB in a statement said it would ensure an orderly exit from South Africa in consultation with the SA Reserve Bank (Sarb) and its departure would not have any major impact on its financials.

“In line with the bank’s strategic plan for rationalisation of overseas branches, the bank is exiting its operations in South Africa.

The business of the bank in South Africa is not very significant,” BoB said.

The bank in recent months has been engaged in a legal wrangle with the Gupta family and their companies after it threatened to close the Guptas' bank accounts.

The bank told the court the Gupta companies had conducted between 150 to 200 transactions a week and the bank has reported more than 30 suspicious transactions valued at R4.2billion to the Financial Intelligence Centre.

The central bank said that the BoB had notified the Office of the Registrar of Banks of its exit from South Africa.

"The Registrar, which is part of the Sarb, is in discussions with the Bank of Baroda to ensure its orderly withdrawal from South Africa so that no depositor is disadvantaged,’’ Sarb said.

The central bank did not disclose when the company will finally close its doors and said it will not be commenting further on the matter.

Sarb last year slapped the bank with a fine of R11 million for lapses in compliance. In India, the bank has also been asked to clarify to authorities the extent of its involvement in the South African scandal involving alleged state capture.

Last week, BoB in a regulatory filing to the Securities and Exchange Board of India, said that it was “actively" co-operating with the South African authorities' investigation on its relationship with the Gupta family.

“Many of these allegations are on historical transactions and the bank has since then significantly improved the compliance process.’’

The Organisation Undoing Tax Abuse (Outa) has called on the South African Reserve Bank (Sarb) to ensure that Gupta related funds in the Bank of Baroda (BoB) are not moved offshore.

“OUTA believes public and business pressure was brought to bear against the Bank of Baroda for its continued services to the controversial Guptas,” Wayne Duvenage, Outa’s CEO said in a statement.

The Bank of Baroda has come under increasing public scrutiny over its continued links with the Guptas, who now have very limited banking options left in South Africa.

In September, Outa got an interim order freezing the rehab funds for the Gupta mines which are held in the Bank of Baroda. The Guptas are opposing this action. The matter is now due to be heard in court in May for a final order, the Outa statement read.


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