CBI acts on OBC's Rs. 389cr-scam complaint six months later
The CBI, left red-faced for not acting on time in the PNB scam, has booked a jewelry firm in Delhi six months after the Oriental Bank of Commerce (OBC) lodged a complaint. According to OBC, Karol Bagh-based Dwarka Das Seth International availed various credit facilities worth Rs. 389cr during 2007-12. But the directors have been untraceable since 10 months, TOI reports.
How did they cheat the bank?
Dwarka Das is run by Sabhya and Reeta Seth of Punjabi Bagh, and Krishan and Ravi Kumar Singh of Sarai Kale Khan. In 2007, they started availing foreign bill discounting under Letters of Credit (LCs). Initially, bills were regularly realized, but soon, they were discounted. They were allegedly using LCs by foreign banks, some poorly-rated, to pay off creditors for purchase of precious metals.
What is a letter of credit?
An LC is issued by a bank and is a guarantee on behalf of a buyer that they will pay the seller correctly and on time. In case they are unable to do so, the bank is liable to cover the outstanding amount.
Directors unreachable at India, Dubai addresses since 10 months
The Dwarka Das directors were also using the LCs to transfer funds outside the country using fraudulent transactions, OBC's complaint alleges. Afterwards, Sabhya formed a company in Dubai called Freya Trading Co. and appointed an Indian representative called Atul Kumar Garg. Neither Garg, nor people reachable at Sabhya's official Dubai number, know where they are. There are speculations that Sabhya might have fled India.
Banks rush to CBI with default complaints after Kothari, Modi
There have been several complaints against loan defaulters after Nirav Modi and Vikram Kothari. Bank of Maharashtra approached CBI against Amit Singla, Ashirwad Chain Co. proprietor, and related agencies. Singla took Rs. 9.5r as loans, and Tech Mach International valued his properties put up as collateral at Rs. 18cr. But after the loans became NPAs, the properties' value was found to be Rs. 2.5cr.