A financial fraud of nearly Rs 51 crore at a Mumbai branch of a nationalised bank is the latest addition to the growing list of scams that have hit Indian banks.
The Central Bureau of Investigation has registered a case against the former head of Bank of India's Mazgaon branch and the directors of two private companies for allegedly siphoning off the money and routing it to the accounts of some businessmen who have trade links with people in Pakistan, Bangladesh and Sri Lanka.
Sources said the Thane-based firms connived with ex-BoI official Sunil Kumar Nigam to misuse the cheque purchase facility and stole money. The service is a kind of temporary overdraft on the basis of cheques, issued by other banks, pending for realisation.
The fraud comes three months after the country's banking sector was rattled by a Rs 13,000-crore scam at the Punjab National Bank, orchestrated by diamantaire Nirav Modi, who misused letters of undertaking issued by the bank's Brady House branch.
According to a CBI officer, Panache Furniture and Interiors Pvt Ltd, and Stone Export House Pvt Ltd, owned by a certain Mahfooz M Khan, had opened current accounts with BoI's Mazagaon branch in 2016 and had availed the cheque purchase facility.
He said, "Under this facility, the account holder can sell the cheques [of companies from which the account holder has to receive money] to the bank.
"The bank, after deducting its margin, gives a certain amount to the account holder and realises the cheques later."
It was alleged that Nigam provided the facility to the two companies without mandatory verification of credentials. "The firms availed Rs 77 crore from BoI under the cheque purchase facility. While BoI was able to encash few cheques, 202 cheques of Rs 51 crore remained unpaid." Khan's companies are said to be engaged in manufacturing furniture and trading in vegetables, fruits and goods.
Nigam was dismissed in December 2017 after an audit uncovered large-scale malpractices with regard to the cheque purchase facility at the Mazgaon branch. The officer said, "The cheques purchased by Bank of India belonged to the account of Khan's sister company. It was found that there were no funds in that account and the cheques had been by deliberately sold by Panache Furniture and Stone Export to defraud BoI."
CHEQUE PURCHASE FACILITY MISUSED
- CBI says a former official at BoI’s Mazgaon branch helped two private companies siphon off Rs 51 crore, which was then transferred to other accounts.
- The Thane-based companies misused the bank’s cheque purchase facility between 2016 and 2017 until an audit uncovered the malpractice
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