GEIPL Bank Fraud Case: ED raids 10 locations in Delhi, Pune

Investigators on Tuesday started search operations at 10 locations in different parts of the country over an alleged fraud case involving M/s Gupta Exim India Private Ltd (M/s GEIPL). The Enforcement Directorate  (ED) — the national financial crime-fighting agency – conducted searches at 10 premises: nine located in the national capital and one in Pune, Maharashtra. 

The ED has recorded an Enforcement Case Information Report (ECIR) on the basis of a Central Bureau of Investigation (CBI) FIR that was registered on the basis of a complaint made by the bank. 

Investigations span premises linked with M/s GEIPL

The premises covered in the search action belong to the entities and persons closely associated with GEIPL’s promoters. 

GEIPL Bank Fraud Case | What is the matter?

According to the ED, a large sum of money in the form of loan funds is allegedly diverted to various related entities of M/s Gupta Exim, which was not engaged in any business or non-related business of M/s GEIPL.

The company and its promoters and directors allegedly siphoned off the loan or funds extended by Punjab National Bank (erstwhile OBC Bank) to the tune of approximately Rs 425 crore. 

The ECIR is an internal document recorded by the ED for recorded cases under the Prevention of Money Laundering Act (PMLA), 2002. 

The filing of this report marks the beginning of an ED probe into suspected money laundering or related financial crimes.

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What does the complaint say?

According to PNB’s complaint, Arvind Remedies Ltd and its promoter including Arvind B Shah allegedly committed a bank fraud amounting to Rs 637 crore. 

PNB was the leader of a consortium of banks that included United Bank of India, SBI, IDBI Bank, Allahabad Bank, Karur Vysya Bank, Indian Overseas Bank and Corporation Bank. These lenders had extended various credit facilities to the entities, in the form of cash credit and term loans amounting to Rs 704.8 crore. 

Out of that amount, a sum of Rs 637.6 crore was outstanding as of September 30, 2016, as per the banks’ books. 

All the bank loan accounts had been declared as non-performing assets (NPAs) between December 30, 2014, and July 28, 2015. Additionally, Can Bank Factors Limited, not part of the consortium, granted credit facilities to the tune of Rs 7.61 crore to the entities.

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