Bank fraud of over Rs 67,300 cr in 2020, cases account for 36.09% of all CBI FIRs

New Delhi: The Central Bureau of Investigation (CBI) has registered bank fraud cases worth over Rs 67,319.40 crore last year — more than triple the amount in 2019 — in 196 FIRs, an analysis of all the 543 FIRs registered by the agency in 2020 has revealed.

However, the anti-corruption agency is largely becoming consumed by bank fraud cases, according to a comparison of such cases from 2017 to 2020. In 2019, the CBI had registered 91 bank fraud cases, amounting to a fraud of Rs 19,830.14 crore. This accounted for 15.40 per cent of all cases registered by the agency that year.

In 2020, bank fraud cases comprised over 36.09 per cent of all cases registered by the central probe agency.

According to 2020's data, as was the case with previous year's, a very small percentage of defaulters (13.77 per cent) were responsible for nearly 80 per cent of the fraud amount. Of the total amount of fraud in CBI cases, Rs 53,379.38 crore (79.29 per cent) were in 27 FIRs, each with a fraud amount of over Rs 500 crore. Some of these FIRs are against the same entities.

The CBI registered 47 cases of bank fraud with amounts between Rs 100 crore and Rs 500 crore, amounting to Rs 9,423.78 crore (13.99 per cent). And the bulk of the FIRs were for cases of fraud below Rs 100 crore, for which the agency registered 122 cases, all of which add up to just 6.71 per cent of the year's total fraud amount.

Millennium Post's analysis of all the credit fraud cases registered by the CBI in 2020 showed that over 58.21 per cent of the agency's branches are involved in probing at least one bank fraud case. As of December 31, 2020, 39 of CBI's 67 branches across the country were probing at least one or more bank fraud cases.

Some of the biggest and noteworthy fraud cases from last year include the massive Yes Bank, DHFL, RKW Developers and Avantha Group fraud cases, the Surana Corporation and group companies racking up a fraud amount of Rs 4,425.76 crore in two FIRs, TDP leader Rayapati Sambasiva Rao-linked Transstroy's Rs 7,926.01 crore alleged fraud, Educomp Solutions' Rs 1,995 crore alleged fraud and many others.

In addition, the CBI had also booked Videocon in a new international bank fraud case, where loan amounts from various Indian banks and foreign banks were allegedly diverted and siphoned off. Given the nature of the purported fraud, the CBI is yet to calculate the exact fraud amount and hence the amount for that case is not included in this data.

While Videocon Limited is under the insolvency resolution process, it is said to owe banks around Rs 31,000 crore.

Yes Bank was alleged to have fronted Rs 750 crore in loans to DHFL subsidiary RKW Developers and invested Rs 3,700 crore in the former's debentures. And in exchange, the Wadhawans of the DHFL group were alleged to have paid kickbacks worth Rs 600 crore to erstwhile Yes Bank MD Rana Kapoor, through his wife's DOIT Urban Ventures Private Limited.

As for the case with the Avantha Group, Bliss Abode, a company in which Kapoor's wife is a director, was allegedly given a posh bungalow on Amrita Shergill Marg here at throwaway prices, purportedly in exchange for loans worth Rs 1,565 crore. Interestingly, the bungalow was then mortgaged repeatedly to avail seven different loans, according to the CBI's FIR.

The agency registered another case related to the Yes Bank scam in September, this time involving Rakesh and Sarang Wadhawans' HDIL, for an alleged fraud of around Rs 200 crore. HDIL was one of the major beneficiaries of the scam perpetrated within the erstwhile Punjab and Maharashtra Cooperative Bank (PMC Bank).

As for Educomp Solutions, IIM-Ahmedabad graduate Shantanu Prakash basked in the limelight for his bold entry into the business of digitising education for years. But the FIR filed against him and his company alleged that he had secured loans from banks by submitting expired, unfinished, or cancelled contracts with schools for the supply of computer systems.

Vikram Kothari's Rotomac Limited faced another FIR last year for bank fraud, this time for allegedly defrauding a Bank of India-led consortium of Rs 806.74 crore. Former Madhya Pradesh Chief Minister Kamal Nath's nephew Ratul Puri and his father Deepak Puri's Moser Baer Solar was also slapped with another FIR, this time for alleged fraud of Rs 787.25 crore.

Another noteworthy case from last year was the one against Sanjay Chandra and his Unitech Limited, both of whom have found themselves in trouble with multiple law enforcement agencies. While the case was filed on a Rs 198 crore fraud complaint by Canara Bank, details from the consortium agreements and a forensic audit by Grant Thornton showed that the company had purportedly misused and diverted Rs 763 crore from loans worth Rs 1,805.86 crore granted to it by the six-bank consortium.

Given the voluminous paper evidence required to be gathered for bank fraud cases, each of these cases could take years and even decades before their trial is finished. As for the CBI, all it can do is build a case as soon as possible and file a charge-sheet. However, another hurdle for the agency in bank fraud cases is that many of the accused flee the country by the time CBI picks up the investigation.

In some cases, banks were seen delaying the filing of a fraud complaint with the CBI, to repeatedly try and recover the bad loans. Some other cases saw banks waiting for years after discovering the fraud before reporting it to the central probe agency.

For instance, Punjab-based Ram Dev International had allegedly cheated SBI and other consortium banks of around Rs 400 crore and fled the country. In the FIR filed in April last year, SBI admits to discovering the fraud four years before filing the complaint with the CBI. In another case registered in November last year, Delhi-based Amira Pure Foods Limited had allegedly defrauded 12 banks of around Rs 1,200 crore and reportedly fled the country. They were nowhere to be found when the CBI raided their premises, according to reports.

Of all the banks to have complained of fraud to the CBI last year, the country's largest public lender State Bank of India emerged as the most common bank to have been defrauded with exposure of some amount in at least 54 of these bank fraud cases — some as consortium lead and others as consortium member. Punjab National Bank came in second with exposure in 39 of these cases.

Significantly, of the 196 cases registered by the CBI last year, 72 were across eight branches dealing with economic offences — Economic Offences Unit - V (EOU-V), EO-I and EO-II in New Delhi, Economic Offences Branch (EOB) in Mumbai, the EOB in Chennai; and the Bank and Securities Fraud Branches (BSFB) in Bengaluru, Mumbai and Delhi.

However, anti-corruption branches/units were found to have registered the most number of bank fraud cases — 109 — with the maximum registered at the Gandhinagar ACB (16). The BSFB, Delhi branch had also registered 16 bank fraud cases, making these two the branches with the most such cases in 2020. A total of 12 cases were registered across four special task and special crime branches as well.

Of the 39 branches that have registered bank fraud cases in 2020, 27 are anti-corruption branches or units. Some of the most important fraud cases have been assigned to units like the Anti-Corruption-V in Delhi. For instance, Moser Baer Solar's (Ratul and Deepak Puri) over Rs 700 crore fraud, dairy firm Kwality Limited's (Sanjay Dhingra) Rs 1,400.02 crore fraud and Hanung Toys' Rs 2,040.63 crore fraud, among others, are being probed by AC-V, Delhi.

Most bank fraud cases involve collusion with officials of the lender bank, which in most cases turns out to be a government bank, thus bringing these suspect officials under the ambit of the Prevention of Corruption Act.

Already operating at nowhere close to its full capacity, and many probe teams involved in cases such as the Sushant Singh Rajput suicide case, the Unnao rape case, the chit fund cases, the Hathras gang-rape and murder case, the CBI might just be starting to face the heat from bank fraud cases. According to data from 2017, bank fraud cases accounted for a little over 3 per cent of all cases registered that year. It has consistently increased in the years since, coming to over 36 per cent in 2020.

Despite these massive frauds in 2020, there are other bank fraud cases that the CBI is currently occupied with, such as the more than a dozen cases against Jatin Mehta's Winsome Diamonds, the case against Vijay Mallya and the ones against diamantaires Nirav Modi and Mehul Coksi. Many cases with political connections such as the one against Transstroy Limited, the Agusta-Westland and UPA-era scams also take longer than usual to be taken to their logical conclusions.

And now, with the Delhi High Court allowing the State Bank of India to go ahead and file a criminal complaint of fraud against Anil Ambani's Reliance Infratel, Reliance Communications and Reliance Telecom with the CBI, the agency's bank fraud burden is set to further increase — by at least Rs 86,000 crore, if all of their lenders decide to declare their accounts as fraudulent. In a statement, Reliance denied that they owed Rs 86,000 crore to banks and said their dues amounted to around Rs 26,000 crore.

So far, SBI, Union Bank of India and Indian Overseas Bank have declared the three Reliance accounts as fraudulent.

However, Reliance's petition in the Delhi High Court challenges the Reserve Bank of India circular on declaring accounts fraud, arguing that the policy leaves no room for defaulter parties to make their case to the banks before their accounts are declared as fraudulent. The high court had recently stayed any action against the three Reliance accounts but the banks can under the current RBI rule go ahead and file criminal complaints with the CBI as is mandatory.

As for how many personnel are involved in probing bank fraud cases, what the agency's conviction rate and disposal rate for these cases are, and whether the agency has enough personnel to probe cases other than bank fraud, a detailed questionnaire was sent to the agency's official spokesperson. A response from the CBI was yet to be received at the time of writing.