Rs 6833 Crore Fraud Hits This Bank; CBI Registers Case To Investigate Fraud
The Kanpur-based textile business company Shri Lakshmi Cotsyn Limited has been charged with duping a consortium of 23 banks of an amount worth Rs 6,833.82 crore, by the Central Bureau of Investigation (CBI).
The company had taken financial assistance worth Rs 7,377.37 crore from different banks, on account of manufacturing blended fabrics and other products.
Of the consortium of banks, the Central Bank of India was the major lender, with an exposure of total Rs 1,361.56 crore.
The company could not pay off the amount despite restructuring the debt. The Central Bank of India declared Shri Lakshmi Cotsyn Limited’s loan account as a fraud on July 20, 2020 to the Reserve Bank of India.
CBI Registers Case Against Textile Company
The CBI has now registered a case against Shri Lakshmi Cotsyn Limited and its directors for committing a fraud with a consortium of 23 banks, amounting to Rs 6,833.82 crore.
The FIR contains the names of Dr. Mata Prasad Agarwal, Pawan Kumar Agarwal, Devesh Narain Gupta and Sharda Agarwal, among others.
A CBI official states, “Searches are being conducted at nine locations, including Noida, Roorkee, Fatehpur and Kanpur.”
In extension to the directors of the company, CBI will also investigate the bank officials, chartered accountants, statutory auditors, stock auditors and empanelled valuers responsible for preparing company balance sheets, financial papers and issuing various compliance certificates, to verify if they were at all a part of the fraud.
As mentioned above, the textile company had taken financial assistance of Rs 7,377.37 crore from these banks for manufacturing blended suiting and shirting, quilted fabrics, denim fabrics, terry towel, ready-made garments, technical fabrics and other products.
The Central Bank of India alone contributed to Rs 1,361.56 crore.
Suspicious Stock Sale
As per the reports, the bank swiftly sold most of their obsolete stock to dubious entities, that helped them rotate the money, and save on taxes. All the obsolete stock was sold to just 42 customers, out of which 12 were related parties to the management.
We will keep you updated, as more details come in.