Private firm under CBI scanner for causing losses of ₹387 crore to banks

The CBI has initiated two probes against Varun Industries Limited for allegedly cheating Canara Bank and Central Bank of India, causing losses of around ₹387 crore. The investigations are focused on diversion of loan funds for non-sanctioned purposes and involve two Dubai-based firms.

MUMBAI: The Central Bureau of Investigation (CBI) has initiated two separate probes against a private firm for allegedly cheating and causing losses to the tune of around ₹387 crore to the Canara Bank and the Central Bank of India.

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The accused firm, Varun Industries Limited (VIL), Mumbai, and its directors/officials, and unknown public servants are under the scanner of the CBI over several allegations including diversion of the proceeds of the loan funds for non- sanctioned purposes.

The Canara bank had given loans worth around ₹118 crore that turned into a Non-Performing Asset (NPA) in May 2012. The Central Bank of India had given loans worth around ₹269 crore that were declared as a NPA in April 2012 due to alleged irregularities in the loan account.

The agency commenced its probes into the receipt of complaints from the two banks. In both cases, two Dubai - based firms came under the scanner of the bank and the CBI for their involvement in transactions under the scanner, agency sources said.

“The CBI received a written complaint in December 2021 from the Central Bank of India after which the agency registered a First Information Report on Friday. The bank’s complaint accused Varun Industries Ltd, and its directors, unknown directors/ officials of the company, unknown public servant, and others for defrauding Central Bank of India to the tune of around ₹269 crore,” a CBI source said.

The allegations in the complaint revealed that the accused company had availed various credit facilities from the Central Bank of India, which was a part of a bank consortium led by Indian Bank, the source said.

The bank complained to the CBI that the accused firm had allegedly discounted export bills/obtained advance against export bills sent for collection to its two associate companies based in Dubai, Al Rad International Trading Est and White Impex General Trading LLC, the source said. The firm allegedly did not honour the bills and later wrote off the same in its books.

The bank also suspected that the Dubai entities could have been used as a conduit to siphon the funds out of the banking channel with the intention of not repaying the funds, allegations which the CBI probe will verify.

The bank also alleged that that actual movements of goods had not happened between VIL and its local traders as proof of supply of goods by way of lorry receipts were not submitted, according to the CBI’s FIR.

The CBI had received a written complaint from Canara Bank in December 2021 against VIL, its directors, unknown directors / officials and unknown public servants for allegedly defrauding Canara Bank) to the tune of around ₹118 crore and registered an FIR on Friday.