The Central Bureau of Investigation has conducted coordinated searches at multiple premises in Mumbai and Kochi in connection with an alleged ₹133.52 crore bank fraud involving the State Bank of India.
The agency has registered a case against Furnace Fabrica (India) Ltd, its former directors and other associated persons over allegations that misleading financial statements and false documents were used to obtain enhanced credit facilities from SBI.
Company and Former Directors Booked
According to the CBI, the former directors and other associated individuals allegedly entered into a criminal conspiracy to secure higher credit limits from the bank.
Investigators allege that the accused submitted:
- False financial information
- Misleading financial statements
- Inaccurate supporting documents
- Allegedly inflated or misrepresented business records
The agency claims the alleged conduct resulted in a wrongful loss of approximately ₹133.52 crore to SBI.
Loan Funds Allegedly Diverted
The CBI further alleges that the sanctioned loan funds were not used for their approved business purposes.
Instead, investigators suspect that the money was:
- Diverted to unrelated purposes
- Siphoned through other accounts
- Routed through associated entities
- Used in violation of credit-sanction conditions
The agency is conducting a detailed review to establish the ultimate beneficiaries and end-use of the borrowed funds.
Searches Conducted in Mumbai and Kochi
Following registration of the case, CBI teams conducted searches at several premises connected with the accused in Mumbai and Kochi.
During the operations, officials reportedly recovered:
- Company documents
- Banking records
- Digital devices
- Electronic data
- Financial statements
- Loan-related documentation
- Other materials relevant to the investigation
The seized records are now being examined to reconstruct the alleged financial transactions.
SBI Loan Sanction Process Under Examination
Investigators are reviewing the complete loan cycle, including:
- Original credit applications
- Requests for enhanced limits
- Borrower financial disclosures
- Loan appraisal documents
- Internal bank approvals
- Security and collateral records
- Post-disbursement monitoring reports
The objective is to determine whether lender verification systems were bypassed or whether additional individuals assisted the alleged fraud.
Money Trail Analysis Underway
The CBI is conducting a detailed money trail analysis to determine where the loan proceeds were transferred after disbursement.
Investigators are examining:
- Bank account statements
- Inter-company transfers
- Related-party transactions
- Payments to associated entities
- Cash withdrawals
- Fund movements through intermediary accounts
The agency is also assessing whether any public servants or additional private individuals facilitated the alleged diversion.
False Financial Disclosures Raise Due-Diligence Concerns
Corporate bank fraud cases often involve a combination of inaccurate borrower disclosures, insufficient independent verification and weak post-disbursement monitoring.
Lenders must independently confirm:
- Revenue and turnover figures
- Receivables and inventory values
- Existing liabilities
- Related-party exposures
- Borrower cash flows
- Actual use of sanctioned funds
Reliance solely on documents submitted by borrowers can expose financial institutions to substantial credit and fraud risks.
Importance of Post-Disbursement Monitoring
Loan due diligence should not end after funds are sanctioned.
Banks should continue monitoring:
- Movement of funds
- Inventory and receivables
- Repayment patterns
- Changes in account activity
- Related-party payments
- Unusual transfers after disbursement
Early detection of suspicious fund movements can help lenders intervene before the entire loan exposure becomes unrecoverable.
Conclusion
The CBI investigation into the alleged ₹133.52 crore SBI fraud is continuing as officials examine financial records, digital evidence, loan documentation and the suspected diversion of borrowed funds.
The allegations remain subject to investigation and judicial scrutiny. Any determination of criminal liability will depend on the evidence placed before the competent court.
Shunyatax Global Insight
Shunyatax Global says that large corporate loan frauds usually reveal weaknesses at two stages: borrower due diligence before sanction and end-use monitoring after disbursement.
Banks should implement independent verification of financial statements, continuous cash-flow monitoring, related-party transaction reviews, stock audits and periodic forensic audits. Borrower disclosures should always be matched with GST records, banking data, statutory filings and actual business activity before enhanced credit limits are approved.