Syndicate Bank premises under CBI raid
The CBI began probing an alleged scam at the state-run Syndicate Bank. It has been argued that the scam involves a sum of almost Rs.1,000 crores. CBI spokeswoman Devpreet Singh told Reuters that the CBI was rummaging 10 locations that included homes of bank employees and bank branches. After the news broke out, the bank's shares were down by 3.4% at Rs.59.70.
The Syndicate Bank scam involved the bank's CMD S K Jain preventing loans of approximately Rs.100 crore on Bhushan Steel and Prakash Industries from being reported as non-performing assets (NPAs). Further, he accepted a bribe of Rs.50 lakh to raise the credit limit of certain companies. Others involved included Pawan Bansal, Purushotam Totlani and Neeraj Singal, Vice-President and Managing Director of Bhushan Steel.
Once a loan is declared as NPA, the borrower faces problems in day-to-day transactions and then the bank begins 'adjusting money' deposited against the overdue. Moreover, the borrower's market credentials get negatively affected when declared a non-performing asset.
The CBI arrested Sudhir Kumar Jain, the Chairman & Managing Director of Syndicate Bank, and 11 others including CMD & Directors of 2 private firms based in Delhi. A case of corruption against them was also registered. The case was registered under Prevention of Corruption Act, 1988 and criminal conspiracy. Following the arrest, Syndicate Bank sacked Jain as it CMD.
The CBI claimed to have seized Rs.21 lakh in cash from the residence of SK Jain along with gold worth Rs.1.68 crore and fixed deposits of up to Rs.63 lakh.
CBI investigations revealed that the nexus of bribe-for-loan scandal went further than Syndicate Bank, linking UCO Bank, Bank of Maharashtra and Canara Bank to the scandal. The key player, Pawan Bansal got several loans sanctioned at his behest including "loan of Rs.600 crore to Era Infra, Rs.500 crore to Tayal Group, and Rs.Rs 1,300 crores to Arshiya International".
According to reports, Pawan Bansal, the Managing Director of Altius Global Finance Private Ltd allegedly used his company "as a front to collect money from various companies he helps and then passes on the money to bank officials."