Private firm under CBI scanner for duping SBI of ₹5.89 crore

The bank had declared the loan account as a fraud in 2022 after it turned into a non-performing asset (NPA) in 2019. This was done as per the guidelines of Reserve Bank of India for the non-servicing of interest and non-payment of principal dues to the bank

MUMBAI: The Central Bureau of Investigation |(CBI) has started probe against a firm and its guarantor for allegedly duping the State Bank of India (SBI) to the tune of ₹5.89 crore.

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The bank’s credit was allegedly misappropriated and diverted for non-sanctioned purposes by the firm as well as the loan’s guarantor. The CBI began its probe on receipt of a complaint from the SBI against the firm’s proprietor, its guarantor and other known/unknown related entities.

The central agency has booked the firm, which is in trading craft paper, registered a case under sections 420 (cheating) and 120B (criminal conspiracy) of the Indian Penal Code.

The bank had declared the loan account as a fraud in 2022 after it turned into a non-performing asset (NPA) in 2019. This was done as per the guidelines of Reserve Bank of India for the non-servicing of interest and non-payment of principal dues to the bank.

The bank had conducted a preliminary investigation into alleged irregularities linked to the loan account that revealed several fraudulent practices as per its report of January 2022.

It was alleged that the accused borrower had shifted the stock from its existing location to another location, from where his relative ran a business unit, also involved in paper trade.

The said act of the borrower had allegedly resulted in the erosion of the bank’s security against the loan, thereby exposing it to losses, according to the bank’s complaint to the CBI.

The bank’s complaint also alleged that the accused borrower and the guarantor diverted the credit proceeds to their personal accounts by routing the transactions through different accounts.

“The loan funds were diverted, and the borrower and the guarantor are accused of cheating the Bank with mala-fide intent against the sanctioned terms and conditions of the loan,” said a source an in the agency.

“The accused persons had committed criminal offence by cancelling the sale deed of the mortgaged property and not utilising the loan funds for the purpose for which the loan was extended, thereby diverting and misappropriating the funds with the intention to cheat the bank,” said the source.

“It was alleged that the irregularities linked to the loan account were conducted under the control and supervision of the proprietor and the guarantor that amounted to the criminal offence of criminal breach of trust and misappropriation,” said the source.

“This resulted in a financial loss to bank to the tune of ₹5.89 crore, excluding the accrued interest from the date of declaration of the account as a NPA,” added the source.