NEW DELHI (Reuters) – The police said on Sunday it had filed a fraud case against executives of Simbhaoli Sugar for causing alleged losses of 1.09 billion rupees ($16.85 million) to state-run Oriental Bank of Commerce.
The bank alleged that the sugar refiner “dishonestly and fraudulently diverted” a 1.48-billion-rupee loan sanctioned in 2011 for financing cane farmers for private use, a statement issued by the Central Bureau of Investigation (CBI) said.
The case comes at a time when the Indian banking sector is getting to grips with its biggest banking fraud totalling $1.8 billion, in which the No. 2 state-run lender PNB has alleged that two of its employees colluded with firms linked to well-known jewellers Nirav Modi and his uncle, Mehul Choksi.
This is the second case in three days registered by the CBI upon complaints from the Oriental Bank of Commerce.
The police has registered a case against several top officials of Simbhaoli Sugar, including its chairman and managing director, chief executive and chief financial officer, some unknown bank officials, and other private persons.
In 2015, the bank declared 978.5 million rupees of the loan as having turned sour and reported the alleged fraud to the Reserve Bank of India.
On top of this, the bank also sanctioned a corporate loan of 1.10 billion to the company in May 2015 “under multiple banking agreements” which turned into a bad loan 18 months later, the statement said.
Chief Executive Officer G. S. C. Rao and CFO Sanjay Tapriya of Simbhaoli Sugar were not immediately reachable for comment.
($1 = 64.7000 Indian rupees)
Additional reporting by Rajendra Jadhav; Writing by Malini Menon; Editing by William Maclean