CHENNAI: A complex bank loan fraud has come to light with State Bank of India staring at a loss of 60 crore after advancing 'market produce loans' ranging from 35 lakh to 40 lakh each to 170 farmers and seeing the sum gobbled up by two suspects named Shenbagam and Velmurugan. A few of the victims said that the two men, posing as bank agents promising to get them 'pension', obtained signatures from them - almost all of them illiterate - and scooted with the huge amount after the bank promptly sanctioned the loans. They are now running from pillar to post trying to prove they were not party to the fraud, they said. SBI transferred one branch manager and ordered a departmental inquiry, maintaining that they were market produce loans and that the farmers knew what they had signed before the loans were sanctioned.
A bank official said Shenbagam and a few others had been involved in a similar fraud, worth around 97 crore, in 2013 and CBI had registered a case based on a complaint from bank managers. The latest fraud has come to light at a few SBI branches, including at Jayamangalam and Thengarai, in Theni and Periyakulam areas, another bank official said.
Difficult to verify genuineness of each borrower: SBI official
An SBI spokesman said financing traders and farmers against stocks of merchandise or produce had been a regular feature for commercial banks for years. The scheme was evolved to help farmers store their products in warehouses till they got an adequate price. During the time the produce remained in the warehouse, the
farmer could secure a loan against its value based on the quality and quantity certified by the warehouse authorities. A time period was stipulated to pay off the loans.
Facilities registered under the Warehousing Development and Regulatory Authority (WDRA) are authorized to issue Negotiable Warehouse Receipts (NWR) with which traders or farmers can pledge their goods with commercial banks and borrow sums.
Separately, an official release from SBI said that most of the victims of the fraud had been borrowing from many of the bank’s branches for a long time and had been paying off the loans promptly. Accepting the occurrence of the fraud but refusing to quantify the amount lost, the SBI release tried to blame it on adverse fluctuations of prices after demonetization and GST.
Some SBI officials claimed that it was very difficult to verify the genuineness of each borrower except to rely upon the authenticity of the know-your-customer (KYC) documents presented by them. Also, the security of the loan components was covered under the NWR certificate presented, they said. The officials also took issue with the warehouse managements saying that “it is the onerous responsibility of the warehouse authority to verify the status of the farmer who stored the produce purported to have been cultivated by him/her in their facility.”
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