No end to bank scams; CBI registered a criminal case Gujarat-based firm for Rs 2,700 crore fraud

The CBI today said it had registered a criminal case against a Vadodara-based company dealing in electric cable and equipment and its directors for allegedly cheating various banks to the tune of Rs 2,654 crore. The central probe agency also launched searches at the official and residential premises of the company — Diamond Power Infrastructure Ltd. (DPIL), and its directors in Vadodara in Gujarat, a CBI spokesperson said.

The CBI alleged that DPIL, which manufactures electric cables and equipment, is promoted by S N Bhatnagar and his sons Amit Bhatnagar and Sumit Bhatnagar, who are also the executives of the firm. “It is alleged that DPIL, through its management, (had) fraudulently availed credit facilities from a consortium of 11 banks (both public and private) since 2008, leaving behind an outstanding debit of Rs 2,654.40 crore as on June 29, 2016,” it said.

The loan, it said, was declared a non-performing asset in 2016-17.

The company and its directors managed to get the term loans and credit facilities in spite of the fact that they were named in the Reserve Bank of India’s defaulters list and ECGC (Export Credit Guarantee Corporation) caution list at the time of the initial sanction of credit limits by the consortium, the agency alleged.

At the time of formation of consortium in 2008, Axis Bank was the lead bank for the term loan and Bank of India was the lead bank for cash credit limits. It is alleged that the firm, with active connivance of officials from various banks, managed to get enhanced credit facilities.

According to the CBI, the company had been allegedly submitting false stock statements to the lead bank by treating receivables more than 180 days (non-current asset) as less than 180 days (current asset) to get more drawing power in their cash credit accounts.

The CBI alleged that DPIL extensively utilised cash credit limits for obtaining a large number of letters of credits, and many of them could not be honoured by the company and were thus “forced charged” on the credit limit.

Bank of India’s exposure to the company is Rs 670.51 crore, Bank of Baroda’s exposure is Rs 348.99 crore and that of ICICI Bank is Rs 279.46 crore, the CBI FIR said.