CBI begins probe into bank fraud involving loans over Rs 3000 crores

MUMBAI,Manju AB(DNA): The Central Bureau of Investigation (CBI) has begun a probe into the suspected corporate fraud involving bank loans of over Rs 3,000 crore after three banks – Andhra Bank, Canara Bank and UCO Bank cried foul. The banks have declared the loan accounts of three group companies promoted by Praveen Kumar Tayal as fraud following an alleged diversion of funds to the group’s privately-held ventures, especially in real estate.

The three companies of the group that are under the CBI scanner are Krishna Knitwear Technology Ltd, Jayabharat Textile and Real Estate Ltd, and Eskay Knit (India).

A senior official from the Reserve Bank of India (RBI) confirmed to dna that the regulator is in receipt of the complaint of fraud from Andhra bank, which is leading the consortium of 14 banks who have exposure to Krishna Knitwear Technology Ltd.

Andhra Bank has now handed over the Krishna Knitwear Technology case to the CBI to investigate the diversion of funds. The company, which specialises in knitted fabrics and spinning of cotton had borrowed Rs 616 crore of working capital and term loans of Rs 200 crore.

Praveen Kumar Tayal did not return calls nor respond to text messages enquiring about the fate of his companies or the alleged diversion of funds.

Surprisingly about two years back, banks had pushed for a corporate debt restructuring (CDR) for all the three companies, in the hope of reviving the companies and getting them to start servicing the debt. But in September last year, all the three companies exited the CDR cell as many banks opposed to the special dispensation given to the case where the promoter, according to bankers, did not seem committed to reviving his company.

A senior Andhra Bank official told dna, “We suspect Rs 800 crore of bank loans in Krishna Knitwear, where we are the lead bankers, were allegedly diverted to unlisted companies.”

Other banks suspect that the group’s arm Reward Real Estate was a recipient of promoter’s largesse.

Another bank official who is also party to the consortium said the companies have diverted large sums from the listed entity to a closely-held real estate arm of the group or to other ventures. “We tried our best to undertake a forensic audit but the company was not co-operating. So we had to hand over the case to the CBI.”

A senior Bank of India official also confirmed that CBI is investigating the accounts of the bank and said the CBI had asked the bank to submit certain documents pertaining to the loans given to the group.

The Tayals are in real estate, textiles and fibres and were the erstwhile owners of Bank of Rajasthan (BoR), until ICICI Bank took it over.

In 2010, the Tayal group was in news following which the RBI forced the merger of BoR with ICICI Bank. Market regulator, Securities and exchange board of India had found that Tayals fraudulently raised their stake in BoR through a series of off-market transactions.

Apart from the three companies now embroiled in the controversy, Praveen Kumar also runs other companies – Ksl and Industries Ltd, Krishna Lifestyle Technologies, Asahi Industries and Single Point Security Solutions.

Posted by on May 15, 2015. Filed under Nation. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.