SC stays CBI probe into forex derivative case

The Supreme Court has stayed the Central Bureau of Investigation (CBI) probe into the forex derivative case. It was the Orissa High Court which had asked for a CBI investigation into banks allegedly mis-selling derivatives.

However, industry bodies like the Indian Banks Association, the Forex Dealers Association, and the Fixed Income Dealers' Association filed a petition in the Supreme Court against the CBI investgation. Their claim is that even if the derivatives sold by banks are a violation of the Reserve Bank's Foreign Exchange Management Act, that doesn't tantamount to a criminal offence.

MR Umarji, Chief Advisor, Legal, Indian Banks' Association, says, "There are violations under the FEMA regulations and these need to be investigated. These arguments were advanced by the peitioners' advocate also. But the Supreme Court Chief Justice and other judges said when there is a clear conclusion reached by CBI and RBI saying that there is no offence disclosed in their preliminary enquiries, then there is no reason for passing an order for investigation by CBI. Therefore, the apex courthas granted a stay. No final conclusion has been reached. The matter it yet to be heard. Notices will be served to all concerned parties. They will be asked to file a reply to petition. Then after considering a reply, the court will hear the matter and take a decision."