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SBI Canara bank fraud

20 December, 2020 - By Bhanu

CBI detects two new bank frauds worth Rs 8,239.79 crore; firms in Hyderabad, Chennai booked.

While Canara Bank filed a complaint of fraud to the tune of Rs 7,926 crore against Hyderabad-based Transstroy (India) Ltd, State Bank of India has filed a complaint of fraud of Rs 313.79 crore against Chennai-based Agnite Education Ltd.

Both the accounts have become non-performing assets (NPAs).

Following the complaints, the CBI conducted searches at various locations including Hyderabad, Guntur, and Chennai, among other places and seized some documents.

The Central Bureau of Investigation (CBI) has registered two separate cases filed by Canara Bank and State Bank of India regarding fraud to the extent of Rs 7,926.01 crore and Rs 313.79 crore, respectively. The first case was registered against a Hyderabad-based private company, its Chairman & Managing Director, additional Directors, and unknown public servants, on a complaint filed by Canara Bank. It was alleged that the private firm had availed credit facilities using multiple banking arrangements. 

The second case was registered against a private company in Chennai, along with its chairman, directors, and others on a complaint by the State Bank of India. It was alleged that the borrower company represented by its Chairman & Directors availed credit limits of about Rs 310 crore from SBI. The loan amounts were said to have been diverted to related parties. Searches were conducted at the premises of private company/other accused at Hyderabad and Guntur, which led to recovery of incriminating documents.

The second case was registered against a private company in Chennai, along with its chairman, directors, and others on a complaint by State Bank of India. It was alleged that the borrower company represented by its Chairman & Directors availed Credit limits of about Rs 310 crore from SBI. The loans amounts were said to have been diverted to related parties. The account became NPA and was declared a fraud. An alleged loss of Rs 313.79 crore (approx) was caused to SBI. Searches conducted at the premises of the accused in Chennai led to recovery of incriminating documents, said CBI.

Later, Canara Bank issued a statement to the exchanges, titled 'Clarification in respect of news regarding alleged fraud by Mis Transstroy India Ltd - Financial implication for Canara Bank - Rs 678.28 crore - Fraud reported to RBI on 10.02.2020 and 100 per cent provisions made. It clarified the following:

"It is clarified that the company was enjoying limits from various Banks under Multiple Banking Arrangement from 2001. Subsequently, a Consortium with Canara Bank as Leader with 13 other Banks was formed in 2013 and the total limit sanctioned was Rs 4765.70 crore and the share of Canara Bank is only Rs 678.28 crore. The account was declared as fraud and reported to RBI on 10.02.2020. Canara Bank has made 100 per cent provision for this account as per the prescribed prudential norms. The company has already been declared as wilful defaulter on 26.12.2018 by our bank. Out of Rs 7926.01 crore fraud amount appearing in the press note, the amount of lending made by all the 14 Consortium members is Rs 4765.70 crore. Remaining amount was lent under Multiple Banking Arrangement. Out of this, exposure of Canara Bank is Rs 678.28 crore only. The case was referred to NCLT and was admitted by NCLT, Hyderabad, on 10.10.2018. The Company is under the process of liquidation."

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