The CBI on Sunday registered a bank fraud case against Simbhaoli Sugars Ltd, a Uttar Pradesh-based private sugar company, for allegedly causing a loss to the tune of Rs 109 crore to Oriental Bank of Commerce, IANS reported while quoting officials.
The investigating agency booked Chief Executive Officer G S C Rao, CFO Sanjay Tapriya, Executive Director Gursimran Kaur Mann and five non-executive directors have also been booked by the agency. Gurpal Singh is the son-in-law of Punjab Chief Minister Amrinder Singh. “Searches are being conducted at eight premises including residences of Directors, factory, corporate office and registered office of the company in Delhi, Hapur, and Noida,” CBI spokesperson Abhishek Dayal was quoted as saying by news agency IANS.
According to Central Bureau of Investigation officials, the Hapur-based Simbhaoli Sugars Ltd in 2011 fraudulently diverted funds received as loans for sugarcane farmers and self-help groups. CBI also conducted searches at offices of the company and residences of its officials at eight places, including one location each in Hapur and Noida, and six locations in Delhi.
The case of loan fraud against the Bombay Stock Exchange-listed company comes just on the heels of major revelations of loan frauds by several major banks. As the banking sector reels under pressure from Rs 11,400 crore fraud in Punjab National Bank (PNB), involving allegedly by Mumbai-based diamond jeweller Nirav Modi and Mehul Chowksi, the new case adds up to the vulnerability of the banking system.
Officials said that the Bank sanctioned a loan amounting to Rs 148.60 crore in 2011 to the private company for financing individual, Joint Liability Groups, Self-Help Groups under the tie-up arrangement under the RBI Scheme to 5,762 sugarcane farmers during the period from January 25 to March 13, 2012. It has been alleged that the company diverted the funds for personal use. According to the complaint, the account turned Non-Performing Asset (NPA) on March 31, 2015, and was later declared as an alleged fraud by the bank to RBI on May 13, 2015, for an amount of Rs 97.85 crore.
It was further alleged that in addition to the existing NPA as on March 31, 2015, the bank, under multiple banking arrangements, had sanctioned another corporate loan of Rs 110 crore to the sugar company on January 28, 2015, to pay its outstanding loan of Rs 97.85 crore, and adjusted the total liability of Rs. 112.9 crore of company on June 30, 2016 by way of deposit of this new corporate loan. The corporate loan, too turned into an NPA on November 29, 2016, thus resulting in its first outstanding loan of Rs 97.85 crore (as alleged fraud) and the corporate loan of Rs 109.08 crore (as fresh outstanding).
Raising concern over increasing number of wilful defaulters and non-performing assets in the banking system, Finance Minister Arun Jaitley termed them as ‘a scar on economy’. “Cases of wilful defaults are something which is much more than the business failure itself,” Jaitley added. The finance minister called it worrisome that loan frauds went undetected in the banking sector, adding that a single flag was not raised when the fraud was detected.
On Saturday, the CBI had registered a case against another Delhi-based diamond jewellery exporting company, Dwarka Das Seth International Pvt Ltd, and its directors after receiving a complaint from Oriental Bank of Commerce. The case was registered nearly six months after OBC filed a complaint with the central agency.
Earlier in the week, the CBI arrested Rotomac Global owner Vikram Kothari and his son Rahul in connection with the company’s Rs 3,695 crore loan default. CBI had booked Rotomac Global Pvt Ltd, Kothari, his wife Sadhana and son Rahul for allegedly defaulting on Rs 3,695 crore in loans taken from a consortium of seven banks.
(With inputs from agencies)