Twitter image of the Enforcement Directorate.
The Enforcement Directorate (ED) has so far taken up about 1,160 money-laundering cases linked to bank loan frauds, arrested about 174 accused persons, and impounded proceeds of crime amounting to about ₹65,279 crore over the past few years.
The properties belonging to the borrowers who cheated various lending banks and other financial institutions were either attached, seized, or frozen through 473 provisional orders. Based on the findings, the ED has till now filed 314 prosecution complaints (charge-sheets), including 70 supplementary prosecution complaints, before the court set up for cases under the Prevention of Money Laundering Act (PMLA).
According to government records, trials in some cases have concluded, resulting in the conviction of eight accused, and confiscation of proceeds of crime to the tune of about ₹15,295 crore. A significant development is that almost ₹15,185 crore have already been returned to the lending banks in question. While about 12 accused have been declared by special courts as proclaimed offenders for not joining the investigation.
This apart, about ₹725 crore has been confiscated under the relevant provisions of the Fugitive Economic Offenders Act, and eight accused declared fugitive economic offenders by the courts, based on the submissions made by the ED.
“The action initiated by the ED not only results in initiation of criminal action on fraudsters but also helps in the recovery of assets held by them. The ED has been investigating money trails involving multiple layers and web of entities that are analysed to identify the ultimate beneficiaries of bank funds. Many investigations have resulted in tracing the assets held by offenders with different shell companies operated by dummy directors,” a government official in the know of the findings said.
In some instances, assets were held directly in the names of relatives and friends of the masterminds, whereas in a majority of the cases, the properties were held secretly through several beneficially owned but unconnected entities to evade detection and recovery of the loan amounts. “The strict conditions imposed by the PMLA doesn’t allow the arrested persons to get bail easily. This helps in reducing non-performing assets of the banks through deterrence of criminal action and confiscation of assets,” the official said.
Explaining the various modus operandi employed for committing fraud, the official said that in such cases, bank loans were taken through manipulation of books of accounts and forgery, after which the funds were diverted and siphoned off. The promoters of several companies have been found to be involved. Some of the major cases being probed by the ED are against Bhushan Steel allegedly involving ₹56,000 crore; against ABG Shipyard Limited allegedly amounting to ₹22,842 crore; and one linked to the Amtek Group in connection with a ₹20,000-crore bank fraud case.
According to the Reserve Bank of India’s annual report, 36,075 bank frauds were reported in 2023-24, and the figure was close to 166% higher than the 13,564 frauds reported in 2022-23. However, the amount involved decreased by 46.7% in 2023-24 to ₹13,930 crore from ₹26,127 crore in the previous financial year.
“The RBI and enforcement agencies have been working closely to prevent loan accounts turning NPAs (non-performing assets) due to criminal acts. According to its ‘Report on Trend and Progress of Banking in India 2022-23’, the asset quality of banks, measured by Gross NPA (GNPA) ratios, has been improving since 2018-19. In 2022-23, the GNPA ratio of schedule commercial banks fell to a decadal low of 3.9% as on March 2023 and further to 3.2% at September 2023,” the official said.
“During 2022-23, the total amount of frauds reported by banks declined to a six-year low while average amount involved in frauds was the lowest in the decade. During April-September of 2023-24, although the number of frauds reported increased over the corresponding period a year ago, the amount involved was only 14.9% of the previous year. The asset quality of the industrial sector improved further with its GNPA ratio at 4.2% at the end of September 2023. Within the industrial sector, the GNPA ratio of large industries reduced from 22.9% at March 2018 to 4.6% at June 2023,” the official said, quoting recent financial reports.
