Bank funds frozen, ₹20 lakh in cash seized in bank fraud case

During the searches on Tuesday, bank funds worth over ₹20 lakh belonging to accused persons and their family members were frozen, and more than ₹23 lakh in cash was seized by the ED

MUMBAI: The Enforcement Directorate (ED) seized ₹23 lakh in cash and froze bank funds worth ₹20 lakh during searches in Mumbai and Indore, as part of a money-laundering probe relating to an alleged bank fraud case against a private business group.

Bank funds frozen, ₹20 lakh in cash seized in bank fraud case

The investigation into Ruchi Group has revealed alleged diversion and siphoning of loan funds, thereby causing losses to banks.

During the searches on Tuesday, bank funds worth over ₹20 lakh belonging to accused persons and their family members were frozen, and more than ₹23 lakh in cash was seized by the ED. Incriminating records, including digital devices, establishing the alleged roles of several accused persons in the case, were also seized by the search teams.

The ED investigation is based on cases registered by the Central Bureau of Investigation (CBI), Bhopal, against several firms of the Ruchi Group that were engaged in businesses relating to agriculture and steel. The companies are alleged to have defrauded banks by diverting and siphoning funds and manipulated accounts, thereby causing losses to several banks.

The ED investigation revealed that a number of bogus firms had been created to indulge in round-tripping transactions. Round-tripping is a practice where two entities engage in transactions that create an appearance of legitimate business activity.

Further, dubious Letters of Credit (LC) and cash credit transactions were allegedly entered into by the defaulting companies and shell entities to divert loan funds for private gains. A LC is a bank-issued document guaranteeing payment from a buyer to a seller in a trade, provided the seller meets certain conditions and submits required documents.

Bogus sales and purchases were allegedly recorded and deliberate losses were caused to siphon loan amounts obtained for business purposes. The proceeds of crime generated through the fraud were concealed, the officials said.