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ACB detects huge loan fraud, registers case

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Srinagar, Jun 27: Anti Corruption Bureau (ACB) Jammu today formally booked the management, officers and officials of the J&K Bank and some illegal beneficiaries involved in financial irregularities and loan fraud worth crores of rupees and also conducted searches at various premises, an official press release informed.

It said a joint surprise check (JSC) was conducted by ACB Jammu following the allegations of financial irregularities by the officers and officials of the J&K Bank, wherein loan facilities were extended to proprietors of a partnership firm M/s Paradise Avenue between 2012 to 2017 in violation of the laid down norms and procedures, as a result of which the loan accounts turned into NPA.

During JSC it was also found that the proprietors of the firm had approached J&K Bank, Branch New University Campus Jammu for a loan of Rs 74.27 crores for setting up a residential township complex under the name and style of ‘Paradise Avenue’ at Narwal, Jammu consisting of 52 flats in each of the towers named Eden and Zion.

The loan amount was sanctioned on January 30, 2012 with the condition that loan would be disbursed in a phased manner after securing margin of Rs 22.09 crores including unsecured loan of Rs 2.00 crores from the borrowers on pro-rata basis.

However, scrutiny of records revealed that loan amount sanctioned by the bank in January 2012 paved way for the firm to purchase 30 kanals of land from different land owners through registered sale deeds in July 2012, after a gap of six months from sanctioning of loan.

This meant that the M/s Paradise Avenue had no title of land in its name when the loan was sanctioned in January 2012 which had to be mortgaged to the bank.

Under a well-knit and predesigned conspiracy hatched by the firm with the bank officials, the amount of sale consideration reflected in the sale deed was shown paid through cheques to the land-owners fraudulently and dishonestly with inflated cost of the land whereas, those cheques were actually taken back from the land-owners and fresh cheques were issued to them from the loan account of M/s Paradise Avenue and loan account of Shree Simula Solutions, other sister concern of the leading partner of the firm with objective and purpose to buy the land in question out of the loan amount sanctioned by the bank, the press release informed.

It said the proprietors of the firm and the bank officials were fully aware about the rules and norms – that the loan cannot be sanctioned against purchase of land for raising of residential township which is a commercial activity. But in league with the bank officials, M/s Paradise Avenue in order to seek release of the loan amount had also issued letters addressed to the bank indicating that the land-owners had supplied construction material to the firm though in reality no such material had in fact been purchased by the firm from the suppliers.

These were in fact sham transactions with motive to siphoning off the bank money, the ACB press release said.

It said on further scrutiny of the bank records, it was revealed that as per the terms and conditions, the bank was to release the amount in phased manner. However, by March 2014, the bank had instead made 100 percent disbursement in first phase only, thereby conferring undue pecuniary advantage upon the beneficiary firm.

Subsequently, the firm borrowed three additional loans of Rs 68.91 crores, Rs 20.00 crores and Rs 14.5 crores. In total, the proprietors of the firm managed to obtain Rs 177.68 crores loan “illegally and fraudulently” in connivance with the bank management and its officials.

The repayment of the loan amounts was to start from September 2017 with a quarterly installment of Rs 11.27 crores. However, the proprietors turned willful defaulters by not making repayment of loan with sole objective to get their loan account declared into NPA and consequently they succeeded in it when on December 31, 2017 loan account was declared NPA by the bank management, ACB informed.

It said the deep-rooted conspiracy between the bank management and the beneficiary firm is evident from the fact that the principal loan amount of Rs 177.68 crores was settled at Rs 130 crores under One Time Settlement (OTS) illegally and against the bank norms.

The bank management by abuse of their authority waived off Rs 50 crores on the principal amount which has inflicted a huge loss to the bank. Even in response to OTS, the cheque issued by the borrower for an amount of Rs 40.00 crores towards OTS has bounced, ACB said.

It said the scrutiny of records of the bank disclosed commission of criminal misconduct by bank management, officers and officials of J&K Bank and the partners of the beneficiary firms and others, which constituted offence under section 5(1) (d) of the J&K PC Act Svt. 2006 read with 120-B RPC punishable under section 5(2) of the Act. A formal case (FIR No. 13/2019) was registered in Police Station ACB Jammu for investigation.

ACB said after registering the case, searches were also conducted at various premises of individual and companies connected with the firm after obtaining search warrants from the court.

During searches, incriminating material such as laptops and documents etc were seized. The investigation of the case is going on.


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