CVC for action against banking officials involved in Rs 2,650cr fraud
Sources said that CVC is on the verge of recommending first stage advice for action against officials of 26 banks, which together provided Rs 2,650 crore to Zoom Developers, a Mumbai-based construction company that was declared a non-performing account last year.
A consortium led by Punjab National Bank had provided Rs 2,650 crore of bank guarantees and credit facilities to Zoom Developers for its projects. All those guarantees and facilities were revoked after the firm failed to execute its projects that were mostly in the UAE and Europe. The company was largely engaged in big industrial constructions and infrastructure ventures.
The spectacular failure of the company's projects led to PNB and Canara Bank making a loss of Rs 537 crore and Rs 88.5 crore, respectively. CBI filed separate cases last year into these two banks being defrauded. A third case of fraud is believed to have been registered with the CBI by the UCO Bank, which had an exposure of Rs 300 crore. The Union Bank, too, had an exposure of Rs 300 crore.
Over the past year or so, CBI has questioned several Mumbai officials of these banks.
Suspicion abounds that a major criminal conspiracy may be in the works since several banks provided bank guarantees in the projects, where the market norm does not require so.
A minor part of these bank guarantees are covered with insurance from Export Credit Guarantee Corporation of India. But most of the money is lost.
Once the CVC gives its first stage advice for disciplinary action against the officials, banks concerned will constitute departmental inquiry that would carry out a final examination of the evidence and counter arguments. Based on the findings, the officials could face action upto dismissal from service. The CBI investigation against them would be conducted simultaneously.
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