CBI books Diamond Power MD, others for Rs 2,654 crore bank fraud

VADODARA/NEW DELHI: Troubles mounted for the beleaguered Diamond Power Infrastructure Ltd (DPIL) on Thursday after the CBI registered a case of cheating and criminal conspiracy against its owners, Suresh Bhatnagar and his sons Amit Bhatnagar and Sumit Bhatnagar, for allegedly cheating a consortium of 11 banks of Rs 2,654 crore.
Interestingly, the company availed loans despite the fact that it was named in the RBI's defaulters' list and the Export Credit Guarantee Corporation (ECGC) caution list, which officials say couldn't have been possible without the involvement of bank officials. The unknown bank officials have been named by the CBI in its FIR.

After registering a case, the CBI teams on Thursday raided several places in Vadodara including the firm's office in Gorwa area and residence of managing director Amit Bhatnagar. Sumit is the joint managing director.

DPIL, engaged in manufacturing electric cables and other electrical equipments, fraudulently availed credit facilities from a consortium of 11 banks (both public and private) since 2008, leaving behind an outstanding debit of Rs 2,654.40 crore as on June 29, 2016, the CBI said.

At the time of formation of consortium in 2008, Axis Bank (with an exposure of Rs 255.32 crore) was the lead bank for the term loan and Bank of India (with an exposure of Rs 670.51crore) was the lead bank for cash credit limits. Other banks which provided loans to DPIL include Bank of Baroda (Rs 348.99 crore), ICICI Bank (Rs 279.46 crore), Allahabad Bank (Rs 227.96 crore), Dena Bank (Rs 177.19 crore), State Bank of India (Rs 266.37 crore), Corporation Bank (109.12 crore) and others.

It is alleged that the firm, with active connivance of officials from various banks, managed to get enhanced credit facilities. According to the CBI, the company had been allegedly submitting false stock statements to the lead bank by treating receivables more than 180 days (noncurrent asset) as less than 180 days (current asset) to get more drawing power in their cash credit accounts. CBI said the company also inflated its turnover figures.

The accounts of DPIL in Bank of India and Bank of Baroda were declared NPAs on February 2016 by RBI based on asset quality report conducted by it while accounts with other banks were declared NPAs from December 2017. The company, CBI alleged, diverted funds to accounts opened in other banks. CBI officials said that they will soon question the owners of DPIL and bank officials who ignored all the laid down guidelines and gave away public money to a company already named in the defaulters’ list of RBI.

According to CBI, the company had been allegedly submitting false stock statements to the lead banks by treating receivables more than 180 days (non-current assets) as less than 180 days (current asset) to get more drawing power in their cash credit accounts.

A team of CBI is learnt to have questioned the company’s directors and seized several documents from the corporate office of DPIL. Recently, one of the DPIL group companies, Diamond Power Transformers Ltd, was declared bankrupt by the National Company Law Tribunal for failing to pay Rs 111crore to two banks.