IDBI Loan Fraud

IDBI Bank reports huge loss to loan fraud, pegs number at Rs. 772 crore

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IDBI Bank has reported a massive loss to the tune of Rs. 772 crore, a report released by the bank stated. The bank attributed the loss to loan fraud, courtesy of borrowers from the erstwhile state of Andhra Pradesh. The bank’s shares fell by almost 5.25% to Rs. 75.25/share after news of the loan fraud surfaced.

IDBI had sanctioned and disbursed Pisciculture loans during a 4-year period between 2009 and 2013, to borrowers from the then state of Andhra Pradesh. The fraud cases were reported from 5 of the bank’s branches from the state – Rajahmundry, Palangi, Bhimavaram, Guntur, and Basheerbagh in the city of Hyderabad.

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A detailed investigation into the borrowers and sanctioned loan amounts divulged that several of these loans were obtained by industrialists, who played roles of loan guarantors for these loans. These guarantors, also referred to as loan aggregators, were a total of 52 in number, and obtained loans by way of presenting fake lease documents of fish-ponds that were non-existent.

In collusion with two IDBI officials as revealed by the investigation, the value of collaterals for these loans was also inflated, amplifying the extent of the fraud. While there was recovery reported in some accounts, a majority of them became Non-Performing Assets post 2013.

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