CBI arrests newspaper baron Venkattram Reddy for ‘loan fraud’

The complaint was filed by Canara Bank after DCHL failed to repay a portion of a Rs 1,230 crore loan availed by it.

Written by Johnson T A | Bangalore | Updated: February 15, 2015 1:59:37 am
canara bank deccan chronicle, deccan chronicle The Chairman was arrested by the CBI in connection with non-payment of a loan of Rs 350 crore obtained from the Canara Bank.

The CBI on Saturday arrested newspaper baron T Venkattram Reddy for allegedly causing a loss of over Rs 350 crore to Canara Bank. Reddy, chairman of Deccan Chronicle Holdings Ltd (DCHL), was arrested in Hyderabad by officers of the CBI’s Bangalore-based Banking Securities and Fraud Cell.

Reddy’s brother T Vinayak Ravi Reddy, managing director of the company, was also picked up.

The CBI had registered an FIR in July 2013, alleging that the accused had, in 2009-2011, entered into a criminal conspiracy to cheat Canara Bank’s Secunderabad Branch.

They had allegedly availed of open cash credit limit with periodic enhancements and multiple short term corporate loans aggregating approximately Rs 1,230 crore, thereby availing excessive bank finance without adequate drawing power.

This was allegedly done by submitting false and fabricated financial statements and suppressing information on borrowings from other banks.

It was also alleged that the accused utilized the short term corporate loans for purposes other than those for which they were sanctioned by fraudulently diverting the proceeds of various credit facilities. The total loss to Canara Bank was alleged to have been an estimated Rs 357.77 crore as on September 8, 2012.

The CBI had earlier conducted searches at premises linked to Reddy in Hyderabad in 2013.

The team from Bangalore arrived in Hyderabad on Saturday morning and called Venkattram Reddy for questioning at the CBI office at Koti.

Reddy was formally arrested at 5 pm, after which he was taken to Osmania General Hospital for a check-up, and subsequently produced before a CBI judge at his residence.

In July 2014, Canara Bank had offered a one-time settlement to DCHL or face legal action. Various banks and financial institutions have filed complaints against the company’s promoters for non-repayment of loans amounting to close to Rs 3,600 crore, which DCHL took to invest in ventures including the IPL team Deccan Chargers.

Venkattram Reddy has been charged under IPC sections 420, 120B, 468 and 471 for wilfully misleading the banks and cheating and submitting fake documents for procuring loans.

On January 22, a special court for Economic Offences summoned the Reddy brothers and DCHL director P K Iyer in connection with a complaint filed by the Registrar of Companies, Hyderabad, for not filing annual returns since 2011.

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