The Jammu and Kashmir Anti-Corruption Bureau on Sunday initiated a preliminary inquiry based on an FIR lodged on Saturday against former chairman of Jammu and Kashmir Bank Mushtaq Ahmad Sheikh, the chairman of Rice Exports India (REI) Agro Limited Sanjay Jhunjhunwala, and 22 others in connection with an alleged loan fraud to the tune of Rs 1,100 crore.
Soon after the FIR was registered, a spokesperson of the ACB said they conducted searches at the residences of the accused in 16 locations, including those of REI Agro vice president and MD Sandeep Jhunjhunwala. The locations included nine in Kashmir Valley, four in Jammu and three in the Delhi-NCR region, the spokesperson said.
According to an ACB release, officers of the bank’s Mahim branch in Mumbai and a branch in New Delhi allegedly sanctioned loans worth Rs 800 crore in favour of REI Agro Ltd based on “fake documents and in violation of the laid down banking procedure during the year 2011-2013’’. The accounts were declared Non-Performing Assets (NPAs) in 2014, thereby causing a huge financial loss to the bank, the statement added.
During the inquiry, it emerged that REI Agro approached the Mahim branch and was given loans/advances worth Rs 550 crore. The bank’s Vasant Vihar branch in New Delhi also sanctioned Rs 139 crore in favour of the company, the release said.
The company had approached the bank for these advances to pay farmers who provided paddy to it.
According to the release, the accused bank officials disbursed loans to REI Agro though Joint Liability Groups (a small group of villagers that approaches a bank for an institutional loan), even though the company had already received the paddy and was not entitled to such funding.
Further, the JLGs were non-existent entities whose antecedents were not verified by the bank, the statement said, adding that the objective was to facilitate the company to divert the loan amount for its own benefit.
The bank also violated NABARD guidelines which state that JLG members must be from the same area/village. This aspect was ignored by bank officials “deliberately and with malafide intentions”, the statement said.
The ACB said bank officials also failed to take cognisance of disbursement requests of the company, wherein REI Agro mentioned that it had already received the produce from the farmers/JLGs, thus making the loan unwarranted. There are no records on who drafted the loan documents and and no vetting certificate of the concerned law department, it pointed out.
According to bank records, the Vasant Vihar branch had taken over the loan obtained by the company from IDFC & IREDA. This account was also declared as an NPA. According to the inquiry, Rs 54 crore was recovered from the company by selling its machines and an outstanding debt of Rs 85 crore remained.
“These loans/advances were sanctioned/disbursed by officials of the Mahim and Vasant Vihar branches in connivance with and under patronage of then J&K Banch Chairman Mushtaq Ahmad Sheikh under a single conspiracy spread over several years, in a planned and pre-designed manner, by misuse and abuse of their authority as public servants of the bank just to serve the interest of the promoters of company REI Agro Ltd., inflicting a huge loss of Rs 635 crore (Rs 550+85 crore). This amount, along with interest component of Rs 489.45 crore, comes to 1124.45 crore,” it added.