Bank fraud: ED attaches assets of over INR 4,000 cr of Bhushan Steel

New Delhi, Oct. 12 (PTI): The Enforcement Directorate on Saturday said it has attached assets worth over INR 4,025 crore of Bhushan Power and Steel Limited (BPSL) in connection with its money laundering probe linked to an alleged bank loan fraud.

The central probe agency said it has attached land, building, plant and machinery of the firm located in Odisha under the provision of the Prevention of Money Laundering Act (PMLA).

The total value, under the provisional order for attachment, is INR 4,025.23 crore.

This is the first attachment in the case and more is expected.

The ED, in a statement, alleged that BPSL used various modus operandi to siphon funds obtained as loans from various banks.

“An amount of INR 695.14 crore was introduced as capital by Sanjay Singal (the then CMD of the company) and his family members in BPSL out of artificially generated long term capital gains (LTCG) by diversion of bank loans fund of BPSL,” it said.

LTCG was exempted from income tax during the relevant time, it added.

The ED’s case of money laundering was filed after studying the CBI FIR registered against the company, Singal and others on charges of corruption.

The ED charged that BPSL had also made RTGS payments to various entities against “fictitious purchases” of capital goods.

Against RTGS payments, these entities had transferred cash to BPSL which was ultimately traced to have been used for generation of artificial LTCG by jacking up the prices of penny stocks by way of synchronised trading, the ED said.

Another amount of INR 3,330 crore invested as equity (share capital and premium) by promoter companies was also found to have been routed out of the funds obtained as various loans and diverted from accounts of BPSL in the shape of advances shown to various shell companies operated by the different entry operators, it said.

The proceeds of crime in this case, the agency said, were laundered by way of introduction into the books of accounts as equity for window dressing the debt equity ratio.

RBI fixes coop banks’ daily reporting system post PMC fraud

The Reserve Bank of India on Friday has changed the daily reporting system at cooperative banks after the collapse of Punjab and Maharashtra Cooperative Bank following the unearthing of over INR 4,000 crore fraud there.

In a circular addressed to chief executives of all cooperative banks, the RBI has asked them to replace the existing system of email-based reporting at the branches to a web-based central system. This will make use of RBI’s Central Information System for Banking Infrastructure (CISBI) which is an online portal that presently allots Basic Statistical Return (BSR) code to branches and offices of all banks.

These instructions are being issued in supercession of all the instructions issued on the subject so far, it said,

“Consistent with the needs of branch licensing and financial inclusion policies as well as the need for requisite coverage of additional dimensions/features, a new reporting system — Central Information System for Banking Infrastructure, has been web-deployed to replace the legacy MOF system,” the central bank notification said.

These banks have been given a period of a month to notify the regulators of the extent of compliance. Under the new system, all cooperative banks are required to submit their information in a single proforma online on the CISBI portal, as compared with the earlier system of submitting separate documents with information about daily business activity at the bank through e-mail, according to the RBI notification.

“All cooperative banks should submit immediately and in any case not later than one week, the information relating to opening, closure, merger, shifting and conversion of bank branches/offices/Non Administratively Independent Offices (NAIOs)/Customer Service Points (CSPs) online through CISBI portal,” the RBI said.

“After the initial submission of information on CISBI portal, a one-time confirmation stating that Correct and updated Bank-level information has been submitted on CISB’ shall be sent by banks to the concerned Regional Office of Department of Co-operative Bank Supervision within one month of issuance of this circular.”

On September 26, the Reserve Bank had placed a withdrawal limit of INR 10,000 per six months on all deposits held at the bank. This was subsequently increased the withdrawal limits to INR 25,000 after opposition from the depositors.

The central bank has already migrated all the past information of these lenders to CISBI, it said. They have also provided the nodal officers at these banks the login credentials using which they can access the new system.