Former chairman, 18 others booked in J&K Bank loan fraud

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The CBI on Friday booked former J&K Bank chairman and 18 others for causing a loss of Rs 800 crore to the bank by granting loans in violation of laid down guidelines.

The CBI has booked former chairman Mushtaq Ahmad Sheikh and others including the loan beneficiary, REI Agro chairman, Sanjay Jhunjhunwala and vice president and managing director Sandeep Jhunjhunwala.

The case was earlier probed by the anti-corruption bureau (ACB) of Jammu and Kashmir and it had found during its preliminary inquiry that loans worth Rs 800 crore were sanctioned to the group on the basis of fake documents between 2011 and 2013 in violation of guidelines. This caused a loss of Rs 800 crore to the bank, ACB sources said.

The Mumbai-based Mahim branch of the bank had sanctioned Rs 550 crore as loans while the Vasant Vihar branch in Delhi had sanctioned Rs 139 crore in their favour against the supplier bill discounting facility and takeovers.

The loans were granted in violation of guidelines, without tangible security and on fake documents.

The company had approached the bank’s Mahim and Vasant Vihar branches for sanctioning of advances for making payment to farmers as per the terms and conditions laid down in the loan sanction order of the bank.

“The farmers were supposed to provide paddy to the company, in turn the company had to sell the produce (paddy) and the remittance thereof had to be deposited in the bank as instalments against advances received by the company.

“Bank authorities and the company knew that the loan amount had to be disbursed among farmers for production of paddy.

“This was brazenly violated by the company in connivance with the bank authorities who allowed disbursement of loans through joint liabilities groups (JLGs), though the company had already received paddy and was not entitled to disburse the loan under such circumstances.

“As per the probe conducted during preliminary enquiry, the JLG’s were in fact non-existing entities whose credentials and antecedents had never been verified by the bank.

“The objective was to facilitate the company to divert the loan amount for its own benefit.

“The bank also violated NABARD guidelines in which members of JLG’s (which is a group of farmers) should be from the same area/village but this aspect was deliberately and with malafide intentions ignored by the bank’s officers,” the CBI FIR says.

The PE had found that these loans were sanctioned and disbursed by the officials of the J&K Bank branch in Mahim, Mumbai, and Vasant Vihar, in New Delhi, in connivance with and under patronage of then chairman, J&K Bank, Mushtaq Ahmad Sheikh under a conspiracy spread over several years.

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