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Loan fraud: Steel firm booked for cheating SBI of ₹57 crore
In 2004, the Central Bureau of Investigation (CBI)’s Banking Security and Fraud Cell (BS&FC) received a complaint which alleged that the firm, a Mumbai-headquartered steel company, availed credit facilities from State Bank of Bikaner & Jaipur (SBBJ) – which merged with the SBI in April 2017 – from 2010 to 2016 for “business activities”
Mumbai: A private firm was recently booked for allegedly cheating the State Bank of India (SBI) of ₹57.03 crore after diverting and misappropriating loan funds from the bank.
In 2004, the Central Bureau of Investigation (CBI)’s Banking Security and Fraud Cell (BS&FC) received a complaint which alleged that the firm, a Mumbai-headquartered steel company, availed credit facilities from State Bank of Bikaner & Jaipur (SBBJ) – which merged with the SBI in April 2017 – from 2010 to 2016 for “business activities”.
“The bank had sanctioned a cash credit facility of up to ₹30 crore, a term loan facility of up to ₹25 crore, among other such credit arrangements, for the accused firm. However, the firm allegedly cheated the SBBJ, now SBI, by submitting fake stock statements showing the inflated value of stock/receivables,” a source said.
“The firm also allegedly transferred a type of credit facility, with an estimated value of ₹25 crore, to related entities with common directors,” the source added. “The actual sale/purchase of goods and other transactions that were undertaken by the firm were alleged to be only accommodative without involving any movement of goods. It is further alleged that large-scale diversion of funds was made.”
The firm is further accused of submitting false documents showing an infusion of capital of ₹7 crore, ‘to comply with the bank’s terms of the loan sanction/s.’ The bank had subsequently conducted its own internal investigation into the alleged irregularities linked to the firm’s loan account, and had identified two then officers of SBBJ’s Nashik branch for being accountable for the lapses.
The firm’s account became a Non-Performing Asset (NPA) in March 2016, with an outstanding of ₹57.03 crore in the cash credit account, thereby causing a loss to the SBI and a corresponding wrongful gain to itself and others. The firm and its two directors were accused of cheating the bank as part of a criminal conspiracy from 2010 to 2016.
The firm, its two directors and unidentified public servants were booked under sections related to the alleged offences of criminal conspiracy, cheating and criminal misconduct under the Indian Penal Code and the Prevention of Corruption Act.
