FD scam: FIRs filed against several state-run banks, individuals - Livemint

At 1.28pm, the PSU Bank Index on the National Stock Exchange (NSE) fell 1.2% while the benchmark NSE Nifty was up 0.25%. Photo: Pradeep Gaur/Mint

Mumbai: The economic offences wing (EOW) of the Mumbai police on Thursday said it has filed nine first information reports (FIRs) against several individuals, including some middlemen, for allegedly perpetrating a fixed-deposit fraud involving a number of public sectors banks.

“The total amount that has been siphoned off in this fraud is over Rs.700 crore. We are in the process of registering 10 more FIRs,” said Rajvardhan Sinha additional commissioner of police (EOW).

A deputy commissioner of police (DCP) at EOW said the agency along with the Central Bureau of Investigation (CBI) is coordinating on a probe involving multiple cases of fraud related to bank fixed deposits in the city perpetrated by the same individuals. He declined to be named.

“We met with the officials of CBI for coordination today,” said the DCP of EOW. He declined to be named.

These individuals and middlemen in collusion with bank officials carried out fixed deposit scams at public sector banks including Dena Bank , UCO Bank , Bank of India , Vijaya Bank , Oriental Bank of Commerce , Central Bank of India , Punjab National Bank , State Bank of Bikaner and Jaipur and Dhanalakshmi Bank , according to the agency.

“Dhanalaxmi Bank has been defrauded of Rs.141.8 crore while Dena Bank of Rs.45.23 crore,” said the DCP of EOW.

According to EOW officials, the perpetrators of the crime approached entities like South Indian Education Society, Mumbai Metropolitan Regional Development Authority, PG Group of Companies and Sant Rohidas Charmakar Mahamandal among others to open fixed deposits with public sector banks through middlemen.

In return, these entities were promised a higher rate of interest on the FDs. Once a fixed deposit was opened through the RTGS facility, the perpetrators gave a fake FD receipt to the entities and retained the original receipts with themselves, said Sinha explaining the modus operandi of the fraud. “These individuals/ middlemen then opened an account in the name of these entities with forged signatures for transferring the overdraft amount. This fixed deposit money was later siphoned off,” said Sinha.

So far, EOW has arrested four people involved in the fraud and is in the process of arresting six others. The EOW has also arrested the alleged mastermind of the scam Mohammed Fashiuddin, promoter of the Showman Group.

“We are also investigating the role of the bank officials involved in the fraud,” said Sinha.

According to a senior official at Central Bank of India , the bank is yet to receive any communication from the EOW. Similarly, an official at UCO Bank stated that no intimation had been received by the bank from the law enforcement agency.

“The EOW has not gotten in touch with the bank’s head office regarding any investigation yet, but it did verify some branch-level transactions,” said a senior official at Dhanlaxmi Bank .

Calls made to officials of other banks went unanswered.

CBI has also registered cases regarding fixed deposit frauds at some branches of Dena Bank and Oriental Bank of Commerce adding up to nearly Rs.400 crore. On 20 August, financial services secretary G.S. Sandhu had stated that the finance ministry is conducting forensic audits at Dena Bank and Oriental Bank of Commerce after details of the irregularities came to light.

On the same day, Oriental Bank of Commerce said in a filing to the stock exchanges that it detected irregularities in transactions worth Rs.180 crore involving the Jawaharlal Nehru Port Trust (JNPT), which had filed a complaint with the CBI in February.

The bank has reported the matter to the Reserve Bank of India (RBI) and the department of financial services of the finance ministry, and initiated departmental action against the erring officials, the bank said in its statement.

Dena Bank also issued a statement on 20 August on a similar fraud. The bank’s Malabar Hill branch in Mumbai received term deposits from various entities and government organizations between 30 January and 5 May. The term deposits amounting to Rs.256.69 crore were pledged to the bank by the same signatories to obtain overdraft facilities of Rs.223.25 crore.

“The funds were surreptitiously transferred out of the bank by creating fake overdraft facility, resulting in a fraud on the bank and the concerned entities/govt organizations,” Dena Bank said in a separate filing to the stock exchanges. The bank “has suspended the erring branch manager and transferred the staff of the concerned branch”, it said. The amount being investigated by the CBI is outside the EOW’s estimation of Rs.45.23 crore.

On Thursday, the PSU Bank Index on NSE fell 1.79% while the benchmark NSE Nifty was up 0.23%. Shares in Dena Bank fell 2.99%, Vijaya Bank fell 0.77%, UCO Bank fell 1.5%, Oriental Bank of Commerce fell 2.58%, Syndicate Bank fell 2.53%.

The investigation by the EOW and CBI comes on the heels of an alleged bribery scandal, earlier this month, involving Syndicate Bank and some companies.