Money & Banking

BMS’ union raises red flag over alleged fraudulent activities at Syndicate Bank

AM Jigeesh New Delhi | Updated on November 13, 2019 Published on November 13, 2019

Complaints to CVC over ₹300-crore scam involving some executives and a builder

The RSS-affiliated Bharatiya Mazdoor Sangh (BMS) is determined to press the issue of non-performing assets, with specific reference to NPAs worth ₹300 crore in Syndicate Bank. BMS’ trade union in Syndicate Bank has approached the Central Vigilance Commission, requesting “stringent action” against certain executives of the bank for alleged fraudulent activities of more than ₹300 crore.

Mrutyunjay Mahapatra, MD and CEO of the bank, who was contacted for his version by BusinessLine, declined to comment. He said in a text message to that he “does not remember the case”.

An e-mail sent to Kranthi Edifice Pvt Ltd, the Hyderabad-based builders who have been accused of “serious fraudulent activities” in the process of conversion of an overdraft facility into an NPA, did not elicit any response.

The allegations have been raised by the national vice-president of Syndicate Bank Staff Association (SBSA) and national general secretary of Syndicate Bank Retired Staff Organisation, KS Bhat.

In a complaint to the CVC, Finance Ministry, and Members of Parliament, including those in the Opposition, Bhat alleged irregularities in Syndicate Bank’s dealings with Kranthi Edifice Pvt Ltd, and urged the CVC to ask the errant officials and executives to proceed on leave till an impartial enquiry is conducted.

Bhat said in his complaint that money laundering to the tune of ₹150 crore (cash withdrawals and transfer of related accounts) and diversion to the extent of ₹300 crore have been done through the accounts of the borrower. “Huge tax evasion has taken place in view of frequent round-tripping of transactions and cash withdrawals,” said Bhat.

He alleged in the complaint that the MD and CEO of the bank did not discharge his duty as expected and that he has failed to suppress the “heinous crime”. Bhat told BusinessLine that he has approached Shobha Karandlaje, BJP MP, and NK Premachandran, RSP leader and MP, on the issue.

“This is just the tip of the iceberg. This is a huge scam. I approached an Opposition MP because this is a matter that involves public money. This has to be raised in Parliament,” said Bhat. NK Premachandran said he has forwarded the letter from the BMS union to Finance Minister Nirmala Sitharaman.

“I have asked her to take stringent action against corrupt officials. I will raise this issue during the winter session of Parliament,” said Premachandran.

The complainant said that timely reporting of the fraud was not done by certain officials intentionally to help the borrower and corrupt officers.

The complaint said fraudulent bank guarantees were issued without authority to the joint ventures entered into by the borrower, bank guarantees were issued beyond the stipulated three years tenure and loans sanctioned on deposits taken as margin money.

“Such transactions are considered fraudulent as per RBI master circular dated July 1, 2015,” said Bhat.

Published on November 13, 2019
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