CBI starts probe into ₹255.74 cr bank loan fraud

CBI probes a ₹255.74 crore bank fraud involving a Mumbai firm, accused of diverting loan funds through fake invoices and false transactions.

MUMBAI: The Central Bureau of Investigation (CBI) has initiated a probe into the alleged ₹255.74 crore bank fraud case against a city firm involved in construction and trading activities based on a complaint from the Bank of Baroda (BoB).

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It was alleged that the loan funds were diverted through Letter of Credit (LC), via submission of dubious invoices and receipts, and by transfer to other bank accounts, CBI sources said. The loan account became a Non-Performing Asset (NPA) in 2018, causing losses to the public-sector bank. LC refers to a financial instrument that assures payment to a seller from a buyer. The alleged irregularities in the firm’s transactions with the bank occurred from 2012 to 2018, CBI sources said.

CBI’s preliminary enquiry probe revealed that the accused firm allegedly made use of the credit facilities for purposes other than the sanctioned purpose and that such utilization was in contravention of the credit terms, the sources said. It further revealed that the firm’s directors and other accused persons, whose roles will be probed, allegedly diverted the bank’s loan funds through LC by submitting false invoices and fabricated receipts to cheat the bank, the sources said.

The bank’s complaint from its Stressed Assets Management Branch alleged that the firm had availed credit facilities in the form of fund-based and non-fund-based limits worth ₹103 crore in 2012, and subsequently, the account was reviewed and enhanced to ₹360.5 crore in 2015, the sources added.

The account’s limit was last reviewed at the same level in March 2018, and it was declared to be an NPA in June 2018, with ₹255.74 crore as outstanding dues, the sources said.