IDBI reports RS 772 crore fraud, shares fall 5.25 per cent

IDBI Bank had sanctioned Pisciculture loans during the period from FY2009 to FY2013 in some branches of erstwhile state of Andhra Pradesh.

By: ENS Economic Bureau | Mumbai | Updated: March 29, 2018 2:24:20 am
India, IDBI Bank, IDBI Bank fraud, IDBI Bank shares fall, business news, bank fraud, indian express news The bank said earlier on Tuesday it initiated a quality assurance audit, expected to be completed by April.

IDBI Bank shares fell by 5.25 per cent to Rs 75.25 after the bank reported a loan fraud of Rs 772 crore involving borrowers in Andhra Pradesh.

IDBI Bank had sanctioned Pisciculture loans during the period from FY2009 to FY2013 in some branches of erstwhile state of Andhra Pradesh. “Subsequently, these cases were parked in five branches — Basheerbagh in Hyderabad, Guntur, Rajahmundry, Bhimavaram and Palangi. It was later discovered that some of these loans (52 aggregators with principal outstanding of Rs 772 crore) were fraudulently obtained by some industrialists who stood as common guarantor for these loans and were referred to as aggregators, by submitting fake lease documents of non-existent fish ponds,” the bank said in a stock exchange filing.

Further, the empanelled valuers also inflated the value of the collateral securities. “While the recovery was achieved in certain accounts, most of the accounts turned NPA from FY 2014 onwards. It was also observed while conducting staff accountability exercise that there were major lapses while processing and disbursing the loans, mainly in respect of Battu Rama Rao, GM and R Damodaran, Ex CGM,” the bank said.

Rama Rao has been dismissed from service while Damodaran had already retired, the bank said. Thereafter, the bank filed five separate complaints with CBI for further investigation in respect of the cases dealt in the five branches. The Central Bureau of Investigation (CBI) has registered the cases for two of the five complaints filed with them in respect of the branches at Basheerbagh and Guntur. CBI is, however, yet to register the cases filed by IDBI Bank in respect of the remaining three branches at Rajahmundry, Bhimavaram and Palangi.

“The bank has already provided for these loans to the extent of 100 per cent and hence, there is no further impact of these accounts on the profitability or balance sheet of the bank. The bank continues to pursue all legal actions to recover the dues from these borrowers,” it said.

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