Syndicate Bank fraud: Jain helped hide Rs 100-cr NPAs

Suspended chairman S K Jain allegedly took bribes to prevent loans being termed non-performing

S K Jain, suspended chairman and managing director (CMD) of Syndicate Bank, had allegedly prevented loans of over Rs 100 crore on Bhushan Steel and Prakash Industries from being declared as non-performing assets (NPAs), agency sources said on Monday.

Jain was suspended by the government on Monday, two days after the Central Bureau of Investigation (CBI) arrested him for allegedly accepting a bribe of Rs 50 lakh to enhance the credit limit of some companies. Financial Services Secretary G S Sandhu said the finance ministry received a preliminary report from CBI, based on which he was suspended.

"We have suspended him (Jain) and two executive directors (EDs) have been given charge of the bank as an interim arrangement," Sandhu said. M Anjaneya Prasad and T K Srivastava are the two EDs of the bank.

CBI has also alleged Jain used to negotiate directly with the companies on the bribe amount and once the deal was struck, he used the hawala channel to receive the money, the sources said. They alleged that once the bribe amount was agreed upon, the company used to pay a hawala operator who forwarded the payment to other businessmen who finally made the payment to brother-in laws of Jain in Mumbai; they too have been arrested.

CBI sources said Jain had allegedly taken Rs 50 lakh as bribe from Bhushan Steel for not declaring loans of nearly Rs 100 crore as NPAs. The sources said a similar deal was struck with Prakash Industries as well, but the alleged bribe is still being traced.

They said the bad loans for Prakash Industries allegedly were about $20 million (approximately Rs 120 crore).

The sources said the agency has been tracking the conversations of Jain for nearly six months and acted when it got clear indication of an alleged bribe exchanging hands. They said CBI is still looking for two alleged middlemen — realtor Purushotam Totlani and Neeraj Singal, vice-president and managing director of Bushan Steel.

No reaction was available from Bhushan Steel and Prakash Industries on the issue.

The sources said once a loan is declared as NPA, the borrower starts facing problems in day-to-day operations of his account and the bank starts adjusting money deposited against their dues besides a negative impact takes place on their market credentials.

Singhal, who is named in the FIR and is yet to be arrested, is alleged to have made the payment through a Totlani, a conduit, to Vineet Godha, Jain's brother-in-law.

The CBI claimed to have recovered cash to the tune of Rs 21 lakh from Jain's residence besides gold worth Rs 1.68 crore and fixed deposits of up to Rs 63 lakh.

The entire racket was busted after CBI monitored the activities of Jain for last six months.

The top-secret operation, which was being monitored by CBI Director Ranjit Sinha, came to an end after the alleged “deal” was being struck by the company with the bank CMD.

CBI has registered two cases against Jain and 11 others, including CMD and directors of two private firms based in Delhi — Bhushan Steel and Prakash Industries — in a bribery case under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy.

Efforts to get a reaction from the two companies did not fructify as Bushan Steel refused to comment and Prakash Industries said there was no one to liaise with the media.