Bank gave loan of crores to man with ₹5-L annual income: ED

“A loan worth crores of rupees was sanctioned to a borrower having an annual income of merely ₹4-5 lakh for purchasing high-end cars. No proper verification of utilisation of loan funds was done in the bank, particularly in cases pertaining to loans for purchasing high-end cars,” sources said

Mumbai: The Enforcement Directorate (ED) has started scanning disbursal of loans by Pune’s Seva Vikas Co-operative Bank without due diligence by the bank’s former employees after the agency found out that the bank had allegedly granted loans worth several crores of rupees for purchasing high-end cars to a man, whose annual income was not more than ₹5 lakh, sources said on Friday.

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It was also alleged that no verification of the loan’s utilisation was done, sources said.

“The probe revealed that the loans were sanctioned by the bank and the case accused without ascertaining the repayment capacity of the borrowers,” a source said. “A loan worth crores of rupees was sanctioned to a borrower having an annual income of merely ₹4-5 lakh for purchasing high-end cars. No proper verification of utilisation of loan funds was done in the bank, particularly in cases pertaining to loans for purchasing high-end cars,” sources added.

The agency found that no such cars were allegedly purchased in such cases under the probe’s scanner. The agency’s probe is ascertaining if a then bank official, who is under the scanner, had allegedly connived with such borrowers in whose cases there was inadequate conduct of due diligence.

The ED had initiated an investigation based on multiple FIRs in Pune against the bank’s former chairman along with the bank’s other directors, officials and loan defaulters. The investigation revealed that the bank was being run allegedly like a ‘family proprietorship’, the sources said.

“All prudent banking norms were violated to illegally sanction loans to favoured borrowers in an arbitrary manner, without checking their creditworthiness, without adequate collateral securities,” the source said. The joint registrar (audit) had earlier done an audit of the bank and found the irregularities after which the Reserve Bank of India had cancelled the licence of the bank last October.

The agency had in January carried out searches at 10 premises – linked to three beneficiaries in Pimpri-Chinchwad and Pune – that had led to the seizure of incriminating documents and valuables/cash worth over ₹3 crore. The ED has so far provisionally attached properties worth ₹122.35 crore in the case.