Security & Fraud

India Investigating $90M Loan Fraud At IDBI Bank

India might be dealing with more illegal activity at a bank. This time, it’s an alleged 6 billion rupee ($90 million) case of loan fraud at IDBI Bank.

According to Reuters, former senior bank officials are among those being investigated, and searches are being carried out at 50 locations, including New Delhi and Mumbai.

In 2014, IDBI allegedly gave an $83 million loan to Axcel Sunshine Ltd, which is based in the British Virgin Islands. The funds were then used to pay off loans of associate companies from the same group, a violation of Indian regulatory guidelines.

IDBI said in a statement late on Thursday (April 26) that it had given a loan to Axcel Sunshine in February 2014, and the company became a non-performing asset in December 2015.

The Central Bureau of Investigation (CBI) also accused the bank of giving an unnamed Finnish company a loan equivalent to 52 million euros ($63 million) in 2010. The firm was granted voluntary bankruptcy by a Finnish court in 2013.

According to CBI, IDBI’s senior management and independent directors ignored existing guidelines and relaxed some of the conditions in order to carry out the loans. The officials being questioned have not been named.

“It is a case of alleged fraud on the bank by then executives of the bank, then promoters of the group and the companies involved,” the CBI said.

The bank also said that it sought to recover funds from one borrower after it became a bad loan, but did not provide any details of the loan or how much it was able to recover from the borrowers.

“The loan has been fully provided for,” IDBI said. “The bank has initiated recovery actions to recover dues from the borrower in August 2016.”

CBI is still investigating $2 billion in fraudulent activity at a branch of Punjab National Bank (PNB). So far, 20 people have been arrested, and non-bailable warrants have been issued for the two men at the center of the fraud: diamond merchants Nirav Modi, the billionaire jeweler, and his uncle, Mehul Choksi, who heads jewelry retailer Gitanjali Gems.

——————————

PYMNTS LIVE ROUNDTABLE: TUESDAY, JULY 14, 2020 AT 12:00 PM (ET)

Digital transformation has been forcefully accelerated, but how does that agility translate into the fight against COVID-era attacks and sophisticated identity threats? As millions embrace online everything, preserving digital trust now falls mostly on banks and FIs. Now, advances in identity data and using different weights on the payment mix afford new opportunities to arm organizations and their customers against cyberthreats. From the latest in machine learning for fraud and risk, to corporate treasury teams working in new ways with new datasets, learn from experts how digital identity, together with advances like real-time payments, combine to engender trust and enrich relationships.

TRENDING RIGHT NOW