n a season of big ticket defaults on bank loans, here’s another one. A Surat-based fleet operator company has defaulted on loans to the tune of around Rs 630 crore that were doled out by the Bank of Maharashtra (BoM), known for its massive networks in rural Maharashtra with depositors who are primarily farmers, pensioners and salaried employees.
While a confidential forensic audit report of the company’s account with the bank, a copy of which is with The Hindu , nails the “misutilisation of funds” in the loans the bank gave out to Siddhi Vinayak Logistics Limited (SVLL), the bank has failed to take action.
Though SVLL now features in the bank’s list of wilful defaulters uploaded on its official website, two of the three officers who were suspended in connection with the case, have been reinstated.
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A whistleblower in the bank informed
Several calls and a text message to Sushil Muhnot, Chairman and MD of BoM, went unanswered.
In his correspondence with the bank, the founder of SVLL, R C Baid flaunted his proximity with Prime Minister Narendra Modi to delay the loan repayment process.
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In one of his letters to the bank on June 11, 2014, a copy of which is with The Hindu , explaining the delay in repaying the loan amount, Mr Baid claimed he was “busy with preparation of very specialised vehicles for 3D campaigning by Mr Modi and his team”, owing to which he could not attend business work.
Background of scam
In 2012, SVLL, which is headquartered in Surat launched its corporate social responsibility scheme called ‘Chalak se Malak,’ (from driver to owner) claiming to help drivers by making them equity shareholders. Under this scheme SVLL took crores of rupees as loans from BoM.
As part of the scheme, the company said it would sell its used as well as new trucks to drivers at a mutually agreed fair price based on the valuation. The loans, BoM was told, would fund the purchases, the EMIs of which the company promised to pay. The driver would get the truck’s ownership after the payment of full loan. However, the bank wasn’t paid any instalment on the loans it had disbursed.
Forensic Audit
In April 2015, the bank appointed an independent firm to conduct a forensic audit of the accounts that SVLL held with BoM.
The confidential report was presented to the audit committee of the board in September 2015 and was not made public. However, it is part of the ongoing CBI investigation in this financial fraud case.
According to the report, Rs 629.84 crore out of the total loan disbursed — Rs 933.25 crore — was misutilised. Of this, there was no money trail for Rs 339.29 crore in the absence of adequate data/ statement from SVLL.
The audit report also observed that same vehicles were offered as security for term loan and old trucks under Chalak se Malak scheme.
A chunk of loans were disbursed from the Deccan Gymkhana and Model Colony branches of the bank. The audit report states that the documents for the disbursements were also inadequate.
A whistleblower who shared the document with The Hindu said the bank management must explain the reasons behind this leniency to SVLL.
“Is it because of the political support it has from Gujarat, which was seen through the letters of SVLL? Why should public money be wasted on such companies?” the whistleblower asked.
A forensic audit is an examination of a firm's or individual's financial information for use as evidence in court