There is one more bank fraud case involving three promoters of Diamond Power and Infrastructure Ltd (DPIL). The CBI has arrested all the three for defrauding more than Rs.2,654 crore. Both private and public sector banks were cheated by the promoters. This is one more fraud committed by businesses after Nirav Modi, who looted more than Rs.13,500 crores from the Punjab National Bank apart from the default of loans from Vijay Mallya, who fled to the United Kingdom.
Allegations of Cheating
The three promoters of Vadodara-based DPIL was Suresh Narain Bhatnagar, who is also a founder, Amit Bhatnagar and Sumit Bhatnagar. The last two were also occupying the positions of MD and joint MD in the company. The CBI arrested these three and indicated producing before a Special Judge of the CBI cases in Ahmadabad. Incidentally, the three promoters were on the run following the registration of a case on March 26 by the agency. The investigating agency alleged cases of cheating the banks through accounts of falsification, the establishment of false documents and forging of records.
The CBI has also conducted raids on different places after registering a first information report (FIR). This included promoters’ residences, factory and office premises of the company. Enforcement Directorate followed suit to raid in respect of money laundering and the income tax department also joined to probe the cases. The exposure of such frauds has dented the image of such companies among the general public.
Since 2008, the company has been availing credit facilities through fraudulent means from a consortium of 11 banks, the CBI’s FIR disclosed. While the public sector banks included Bank of India, Bank of Baroda, State Bank of India, Dena Bank, Indian Overseas Bank, Allahabad Bank, Corporation Bank and Exim Bank, private sector banks included Axis Bank and ICICI Bank.
The outstanding debt amounted to Rs.2,654.40 crore at the end of June 29, 2016. Significantly, Bank of Baroda and Bank of India have declared DPIL accounts as non-performing assets on February 16, 2016, itself, other banks have resorted to similar move from December 2017. Therefore, it is quite unlikely that the performances of these eleven banks would be impacted by the fraud in the financial year ended March 2018.
Among the banks that offered the biggest loan to DPIL was the Bank of India. The company owes the lender Rs.670.51 crore while Bank of Baroda should get a refund of Rs.348.99 crore. DPIL also owes Rs.227.96 crore and Rs.117.19 crore to Allahabad Bank and Dena Bank respectively. As far as the State Bank of India is concerned, the exposure was about Rs.266.37 crore. In respect of the private sector banks, ICICI Bank and Axis Bank have an exposure of Rs.279 crore and Rs.266.32 crore respectively, according to the Hindu Businessline.
Significantly, the arrests and another fraud came to light amidst the investigating agency probing the country’s biggest fraud involving PNB. Nirav Modi, a jeweler, and his uncle, Mehul Choksi, were charged with duping banks by getting loans overseas based on fake guarantees.
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