The Hindu : Business : CBI files cases against 5 GTB borrowers

Online edition of India's National Newspaper
Tuesday, Jan 04, 2005

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CBI files cases against 5 GTB borrowers

By Our Special Correspondent

NEW DELHI, JAN. 3. Making one of the first moves against fraudulent activities, which led to the collapse of Global Trust Bank (GTB), the Central Bureau of Investigation (CBI) has filed five cases against one individual and four companies under various sections of the Indian Penal Code.

Instances of serious financial improprieties came up during examination of the GTB accounts by Oriental Bank of Commerce (OBC), which has taken over the collapsed bank. Internal investigations revealed that GTB had taken high credit exposures in certain accounts, even exceeding exposure norms prescribed by the Reserve Bank of India. High degree of imprudence was also noticed while sanctioning loans and it was found that GTB "appeared to have abetted certain group of borrowers to siphon off funds through banking channels. The conduct of most of these accounts reveals that deliberate attempts had been made to camouflage the position of non-performing assets (NPAs or bad loans) by making fresh sanctions in sister or allied concerns, including some front companies,'' an official note issued by the Finance Ministry said.

On the basis of internal investigations, OBC has filed criminal complaints with the CBI. Consequently, CBI Mumbai registered a regular case against Unitel Software Limited for having caused wrongful loss to the tune of Rs. 6.76 crores to GTB in the matter of sanctions, disbursal and utilisation of credit facilities.

In another case against Ashok Advani of Business India Publications and unnamed officials of GTB, the CBI registered a regular case for cheating the bank to the tune of Rs. 15 crores by obtaining credit facilities on the basis of misrepresentation. It was falsely mentioned in the process note that the account of Business India was a new one whereas Business India was banking with GTB since 1994 and had defaulted in payment of credit facilities sanctioned earlier.

In another instance, the CBI registered a preliminary enquiry in the case of Petro Energy Products Company Limited for cheating GTB to the tune of Rs. 78.41 crores at Bandra (Mumbai) branch and Rs. 23.15 crores at the Chennai branch. A similar preliminary enquiry case was registered against Shonk Technologies International Limited for a wrongful loss of Rs. 38.49 crores on the basis of misrepresentation and diversion of funds for purposes other than for which the loan was sanctioned.

The CBI also registered a complaint in Bangalore against Pearl Distilleries for causing wrongful loss of Rs. 10.28 crores to GTB in the sanction and disbursal and utilisation of credit facilities.

Some other cases were also being examined and it is likely that OBC would lodge further complaints with the CBI.

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