Surat-based entity and 17 others booked for bank fraud

Factory siphoned off funds taken in the name of the farmers.

The CBI has booked a Surat-based entity, Shree Mandvi Vibhag Sahkari Khand Udyog Mandli Limited (SMVSKUML), and 17 others for alleged bank fraud involving over ₹42 crore.

The factory is engaged in the production of sugar and by-products. On its request, a term loan of ₹50.25 crore was sanctioned under a consortium arrangement from three banks — the Corporation Bank, the Central Bank of India and the Union Bank of India.

The Union Bank of India also sanctioned ₹40 crore in favour of 1,500 individual farmer members of the entity.

It is alleged that the funds taken in the name of the farmers were siphoned off. The matter came to light when the bank issued notices to the defaulter farmers for recovery of the loans. The farmers refused to repay saying they had never taken any loans. Thus, 1,495 accounts turned non-performing assets in September 2018.

The farmers also informed the bank that they had not received the sale proceeds for the sugarcane supplied by them to the factory. The factory had earlier declared that the farmers had no liability of paying back the loan.

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