In a sensational case of bank fraud in the state, a Tamil Nadu-based firm has been accused of defrauding the State Bank of India to the tune of Rs 90 crore.
Indhumathi Refineries Private Limited in Virudhunagar district, Tamil Nadu, is alleged to have defrauded the State Bank of India by using fake invoices in exchange for obtaining Letters of Credit (LoC) from the bank.
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
According to one report in The Hindu, the fraud was discovered when the firm’s invoices from companies to obtain up to 46 LoCs were discovered to have been falsified. They turned out to be fake invoices from bogus companies drawn up in order to obtain the LoCs.
Following this, the SBI approached the CBI's Bank Securities and Fraud Cell in Bengaluru. The CBI then filed an FIR and charge sheet against the firm’s proprietor R Shenbagan in addition to R Rajan, Raji Shenbagan, Thirumagal Rajan as well as employees of the firm and the bank itself.
Following the CBI charge sheet, on Saturday, the Enforcement Directorate raided nine properties of Indhumathi Refineries Private Limited in Virudhunagar district in connection with the alleged money laundering.
The raids also took place at the properties of the firm’s proprietor R Shenbagan, in Madurai and Coimbatore.
Reports said that during the ED’s interrogation, the accused did not reveal details of any financial transactions, bank accounts or properties involved.
As per one report in the Indian Express, the Enforcement Directorate officials said that they have filed a case against the firm under the Prevention of Money Laundering Act (PMLA).
In addition to the LoCs, the SBI had also given the firm loans as well as cash credit facilities.
According to the newspaper, the ED complaint said, “It had availed a total of 46 LOCs from the SBI which were issued against bogus firms/fake invoices for a value of around Rs 87.36 crore which was devolved on the bank later due to insufficient funds in their account and also diverted the business proceeds which resulted into a pecuniary loss of around Rs 90 crore to SBI.”