The CBI has booked former J&K Bank chairman Mushtaq Ahmad Shaikh and 18 others for a loss of Rs 800 crore to the bank caused by loans due to REI Agro, which were issued in breach of guidelines, without tangible security and on fake documents, officials said.
Besides bank officials, the Central Bureau of Investigation (CBI) has also booked REI Agro Chairman Sanjay Jhunjhunwala and Vice Chairman and Managing Director Sandeep Jhunjhunwala, they said on Friday.
The case had already been investigated by Jammu and Kashmir’s anti-corruption arm and it had discovered during its preliminary investigation that loans worth Rs 800 crore had been sanctioned to the group on the basis of false documents between 2011 and 2013 and in violation of guidelines, officials said.
This caused a loss of Rs 800 to the bank, they said.
The Mumbai-based bank’s Mahim branch had sanctioned Rs 550 crore in loans while Vasant Vihar branch in Delhi had sanctioned Rs 139 crore in their favor against vendor bill discounting facility and takeovers.
The company had approached the Mahim and Vasant Vihar branches of the bank to seek approval for advances to make payment to the farmers under the terms and conditions set out in the bank’s loan approval order.
“Farmers were supposed to supply paddy to the company, in turn the company was to sell the product (paddy) and the remittance of it was to be deposited in the bank as installments on the advances received by the ‘business,’ the FIR said in the case
The bank authorities and the company knew that the loan amount was to be disbursed among the farmers for paddy production.
But this was brazenly violated by the company in collusion with the banking authorities who allowed the loan to be disbursed through joint and several liability groups (JLGs), although the company had already received paddy and had not the right to disburse the loan in such circumstances.
“According to the investigation conducted during the PE, the JLGs were in fact non-existent entities whose credentials and backgrounds had never been verified by the bank. The purpose was to help the company hijack the amount of the loan for his benefit,” the FIR said.
“The bank also violated NABARD guidelines that members of JLG (which is a farmers group) should be from the same region/village, but this aspect was deliberately and with dishonest intentions ignored by the leadership of the bank,” the FIR alleged.
The conclusions of the anti-corruption office’s preliminary investigation indicate that it was surprising that no tangible guarantee was taken by the bank in these cases.
“These loans and advances were sanctioned and disbursed by J&K Bank branch officials in Mahim, Mumbai, and Vasant Vihar, New Delhi, with the connivance and patronage of J&K Bank Chairman, Mushtaq Ahmad Sheikh, under of a single conspiracy spread over several years…” the FIR said.
The FIR said this was done in a planned and preconceived manner by misuse and abuse of their authority as bank officials, just to serve the interests of the company’s promoters – Sanjay Jhunjhunwala and Sandeep Jhunjhunwala.
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