CBI court in Ahmedabad sends ex-bankers to 3-yr jail in multimillion-rupee bank fraud case

A Special CBI Court in Ahmedabad has convicted two former bank officials and two private individuals for their roles in a sophisticated loan fraud scheme. The case, one of 17 separate frauds, highlights a systematic abuse of government-backed credit schemes.

All four accused were convicted under sections of the Indian Penal Code, including 120-B (Criminal Conspiracy), 420 (Cheating), and 471 (Using forged documents), alongside provisions of the Prevention of Corruption Act. The court sentenced the convicts to three years of rigorous imprisonment and imposed fines.

The judge remarked that such crimes convert beneficial government lifelines into "a personal windfall for a few greedy individuals”, undermining the nation's economic growth and public trust.

The court found that during 2012–2013, the then Branch Manager Bhagavati Prasad and Assistant Manager Bhaskar Soni entered into a criminal conspiracy with private borrowers to fraudulently sanction loans under the CGTMSE and ‘UCO Udyog Mitra’ schemes. These schemes were designed to provide collateral-free credit to small enterprises, but the accused exploited the lack of security requirements to siphon off public funds.

In this specific case, a term loan of ₹10 lakh was sanctioned to private individual, for the supposed purchase of embroidery machinery. The investigation revealed that the machinery was never delivered. Instead, the supplier, funnelled ₹5 lakh back into the borrower’s personal account just days after disbursement.

The court noted that the bank officials bypassed every mandatory safeguard. They ignored the fact that the business was located outside the bank's service area, failed to verify original KYC documents, and accepted a forged rent agreement. 

The court dismissed the defence’s claims of innocence, stating that the intention to deceive was present from the inception of the loan process.