A PIL was filed in the Supreme Court on Monday seeking a probe into a ₹1,537-crore banking fraud allegedly facilitated by asset reconstruction companies (ARCs), a bank consortium led by the SBI and a Noida-based infrastructure firm.

The PIL has alleged that a total debt of ₹1,537 crore owed to public sector banks has been settled through two complicit ARCs — Prudent ARC Ltd and Phoenix ARC Ltd — for a mere ₹73.50 crore.

According to the petition filed by three individuals, Noida-based JKM Infra Projects Limited took loans of ₹912 crore from a consortium of seven banks led by the SBI between 2012 and 2015.

The loans were sanctioned against collaterals of only ₹60-72 crore, raising questions of deliberate banking negligence. Within a year of disbursement, the company began defaulting on repayments, the petition filed through advocate Ashwani Kumar Dubey submitted.

According to the petitioners, a forensic audit conducted by Ernst & Young in 2018 found evidence suggesting that more than ₹902 crore had been diverted through shell companies, non-existent vendors, undisclosed bank accounts and suspected fraudulent transactions.

“The report itself stated that audit findings met every criterion for classification of the account as ‘fraud’ under the RBI Master Directions. Despite this, SBI, the lead public sector bank, didn’t classify the account as fraud, buried the forensic report, appointed a second auditor to dilute the findings, and then auctioned the loan to sole bidder Prudent ARC at 75 per cent discount. The fraud was concealed under the cover of ARC framework,” the petitioners said.

The PIL sought a direction to the Centre “to constitute a judicial commission or an expert committee including officers of the RBI, Sebi, Serious Fraud Investigation Office, ED and the CBI to investigate the corporate and banking fraud facilitated by the asset reconstruction companies (ARCs)”.