The police said on Sunday it had registered a fraud case against executives of Simbhaoli Sugar for allegedly causing losses of 1.09 billion rupees to the public-sector bank Oriental Bank of Commerce.
The Simbhaoli Sugar fraud is the second case in three days registered by the CBI upon complaints from the Oriental Bank of Commerce.
A statement issued by the Central Bureau of Investigation (CBI) said that the bank stated that the sugar refiner “dishonestly and fraudulently diverted” a 1.48-billion-rupee loan for private use. The loan was sanctioned in 2011 and was originally intended to finance cane farmers.
The case has come to light at a time when the Indian banking sector is already struggling with its biggest banking scan amounting to a massive $1.8 billion, in which the second largest state-run lender PNB has alleged that two of its employees conspired with firms linked to well-known jewellers Nirav Modi and his uncle, Mehul Choksi.
The police filed 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.
Back in 2015, the bank had declared 978.5 million rupees of the loan as having turned bad 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 added.
Chief Executive Officer G. S. C. Rao and CFO Sanjay Tapriya of Simbhaoli Sugar have not commented on the matter.