India’s federal police filed charges on Monday against a former chairman of state-run Canara Bank and others over allegations that the officials helped a company defraud the bank of about $10.5 million taken in loans over four years ago.
The Central Bureau of Investigation (CBI) also said it had arrested seven people – including two former managers of the country’s top lender, State Bank of India, a former manager of Canara Bank and directors of a Kolkata-based private company – in a separate “bank fraud” case of about 150 million rupees ($2.3 million).
India has cracked down on shady loans in its mammoth state banking sector after a more than $2 billion fraud was uncovered at state-run Punjab National Bank (PNB) earlier this year.
As of last September, state banks held about 87 percent of the Indian banking system’s 9.46 trillion rupees (about $147 billion) of soured loans that are non-performing, restructured or rolled over.
In the December 2013 case, the CBI, the federal investigating agency, said charges were filed against five former Canara Bank officials including former chairman and managing director R.K. Dubey, two former executive directors of the bank and a current bank official.
A Delhi-based private company and its directors were also charged, the CBI said in a statement.
Canara Bank did not immediately respond to a request for comment. Dubey was not immediately available for a comment.
The CBI, which had first registered the case in 2016, said a 683.8 million rupee loan to the Delhi-based jewellery company, Occasion Silver Pvt Ltd, turned bad within a year of the bank giving it the loan.
“The funds were siphoned off through a chain of alleged bogus transactions facilitated by fake sister concerns, family members and bank officials including the top executives,” the CBI said.
“It was also revealed during investigation that there was an alleged nexus between the bank officials with the private persons which led to the perpetration of the fraud,” the agency said.
Reuters could not immediately locate contact details of Occasion Silver Pvt Ltd.
In the alleged PNB fraud – the biggest in India’s banking history – the bank has accused two jewellery groups, one controlled by diamond tycoon Nirav Modi and the other by his uncle, Mehul Choksi, of colluding with rogue bank employees to secure credit overseas.
The key accused in that case have denied any wrongdoing.
