What Happened in the Rs 637 Crore Bank Loan Fraud Case?

Chennai, Sep 4 (NationPress) - In a series of searches across multiple cities, the ED has uncovered illicit assets and has taken steps to freeze bank accounts in connection with a fraudulent bank loan scheme amounting to Rs. 637.58 crore. The implicated company is Arvind Remedies, as confirmed by an official on Thursday.

On September 2 and 3, the ED conducted extensive searches at various sites in Chennai, Kancheepuram, Goa, Kolkata, and Mumbai. The premises of promoters, fake Directors, and key personnel associated with Arvind Remedies were scrutinized under the PMLA, 2002.

During these operations, a substantial amount of incriminating documents, digital evidence, and property-related papers were seized. Additionally, shares worth Rs 15 lakh from both listed and unlisted companies were frozen, according to the ED.

The investigation revealed that certain assets, including both immovable properties and shares, were concealed by the promoters under the names of family members or distant relatives to hinder banks' recovery efforts.

Approximately 15 lakh shares belonging to various companies, both listed and unlisted, have been frozen by the ED.

During the searches, several dummy Directors admitted their lack of knowledge about the company's operations and stated that they received monthly payments in cash from brokers. These Directors merely signed checks for shell companies without understanding their purpose, the ED reported.

The ED's investigation was initiated based on an FIR filed by the CBI.

This FIR stemmed from a complaint by Punjab National Bank (PNB), which alleged that Arvind Remedies and its promoter, Arvind B Shah, defrauded a consortium of banks to the tune of Rs 637 crore.

PNB was the lead bank in a consortium that included various financial institutions such as United Bank of India, State Bank of India, IDBI Bank, Allahabad Bank, Karur Vysya Bank, Indian Overseas Bank, and Corporation Bank. They collectively provided credit facilities amounting to Rs 704.75 crore, out of which Rs 637.58 crore was outstanding as of September 30, 2016. All loan accounts have since been classified as NPA.

The ED's findings indicate that the bank funds were misappropriated through shell companies controlled by the promoters, as stated in their announcement.

Numerous dummy Directors were appointed by promoter Arvind B Shah via brokers to oversee these shell companies.

Bank funds were manipulated among shell entities to present inflated turnover figures to the banks, thereby persuading them to extend additional credit. This fund rotation was also utilized to artificially inflate share prices for profit. Additionally, some funds were diverted to acquire assets, which were then disposed of without the banks' knowledge, leaving them without the means to recover their loans, the ED concluded.