The Telegraph
Friday , August 29 , 2014
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Hits and misses in money tale
Fresh fraud in fixed deposits discovered

Mumbai, Aug. 28: A scam of a huge magnitude has been unearthed by the Economic Offences Wing (EOW) of the Mumbai police just days after cases of misappropriation of funds worth Rs 436 crore at two state-run banks came to light.

The EOW has stumbled upon a Rs 1,000-crore fixed deposit scam, allegedly perpetrated by some people in collusion with bank officials.

The scam, it seems, may involve a number of banks, including Vijaya Bank, Uco Bank, Dena Bank, Bank of Baroda, Oriental Bank of Commerce (OBC) and Dhanlaxmi Bank.

The authorities have filed 10 first information reports (FIRs) against various officials of banks and other individuals. While six arrests have been made, the alleged mastermind behind the scam is believed to be Mohammed Fasihuddin, promoter of the Showman group.

Sources said the scam was similar to those unearthed at Dena Bank. Customers were issued fake fixed deposit receipts (FDRs) and the original receipts were allegedly retained by middlemen. Loans on the basis of these FDRs were then raised and passed on to third parties.

The EOW has found out that the fixed deposits of South Indian Education Society and Mumbai Metropolitan Regional Development Authority were misused.

The news of the scam affected the share prices of the banks that may be involved. While the Oriental Bank of Commerce share ended with losses of 2.58 per cent, the Uco Bank scrip was lower by 1.50 per cent, while Dhanlaxmi Bank closed in the red by dropping over 5 per cent and Dena Bank by nearly 3 per cent.

Their fall came on a day the benchmark index rose 77.96 points to end at a new peak of 26638.11 and logged the seventh straight month of gains in August.

Recently, the ministry of finance had ordered a forensic audit at Dena Bank and OBC after reports surfaced of alleged misappropriation of funds by certain employees. Disciplinary action has now been taken against them, and the banks have suspended a few officials. Further, complaints have been lodged with the Central Bureau of Investigation.

Meanwhile, as an offshoot of the Syndicate Bank CMD bribery scandal, the CBI has started two enquiries into the role of middleman Pawan Bansal in the alleged easing of loan conditions and credit facilities for corporates from Uco Bank and the Bank of Maharashtra.

Syndicate Bank’s chairman and managing director S.K. Jain was arrested this month in a corruption case for allegedly receiving Rs 50 lakh from Bhushan Steel and another company for extending their credit limits.