CBI books Vadodara company and its directors for 2,654-crore bank loan fraud

Diamond Power Infrastructure Limited and its directors managed to get term loans and credit facilities in spite of the fact that they were already appearing in the RBI’s defaulters list.

The Central Bureau of Investigation has registered a cheating case against Vadodara-based Diamond Power Infrastructure Limited (DPIL) and its directors for allegedly cheating 11 banks to the tune of ₹2,654 crore. The loan was declared a non-performing asset in 2016-17.

The agency is conducting searches on the premises of the company and its functionaries.

The CBI has alleged that DPIL, promoted by S.N. Bhatnagar and his sons Amit and Sumit Bhatnagar, who are the managing director and joint managing director of DPIL, indulged in the alleged cheating.

The company is into manufacturing of cables and other electrical equipment. “It is alleged that DPIL, through its management, fraudulently availed credit facilities from a consortium of 11 Banks (Public Sector and Private Sector) since 2008, leaving behind an outstanding debit of ₹2,654.40 crore as on June 29, 2016,” said an official.

The company and its directors managed to get the term loans and credit facilities, in spite of the fact that they were already appearing in the RBI’s defaulters list and ECGC Caution List at the time of initial sanction of credit limits by the consortium, it is alleged.

At the time of formation of consortium in 2008, Axis Bank was the lead bank for the term loan and Bank of India was the lead bank for cash credit limits.

It is alleged that the company, with the active connivance of officials from various banks managed to get enhancement in credit facilities.

In 2011, when DPIL had projected turnover of ₹2197.60 crores for the year 2012, whereas the actual turnover was ₹1,267.60 crores only for 2011.

In spite of consistent failure to achieve the inflated figures of estimates, Bank of India officials while conducting the credit review, did not decrease the cash credit limit. They kept it unchanged at ₹480 crore even though such figures were based on grossly exaggerated sales figures, the CBI has alleged.

According to the CBI, the company had been submitting false stock statements to the lead bank by treating receivables more than 180 days (non-current asset) as less than 180 days (current asset) to get more drawing power in their cash credit accounts.