Axis Bank on Tuesday clarified on a claim by Australia-based news portal, Scams Breaking, that the private sector lender provided loans to Kolkata-based SREI Infrastructure to the tune of Rs 44,000 crore without any due diligence and verification of end use of the loan amount.
Refuting the news portal's allegation, the lender said, "The report is grossly inaccurate and baseless insofar as the bank's outstanding to SREI entities or underwriting practices and processes are concerned."
The bank said that its outstanding loan to SREI entities and SREI group (including SREI entities) stood at Rs 411 crore and Rs 800 crore, respectively, as on December 14, 2020.
"The Bank has complied with its underwriting practices and approval processes for any exposure taken in relation to SREI Equipment Finance Limited and SREI Infra Finance Limited (collectively "SREI entities")," it said in a regulatory filing.
"Axis Trustee Services acts in its fiduciary capacity as a trustee and / or custodian and charges registered by it is not a reflection of the exposure of Axis Bank," it said.
The bank further stated that it is evaluating all remedies available to it against the author and publisher of the report.
In a press statement on December 14, 2020, Australian news agency International Media Corporation (IMC)-controlled Scams Breaking reported that Indian banks blindly shell crores of public money without any due verifications in yet another huge scam commissioned by Kolkata's Kanoria Brothers who run SREI Infrastructure Finance.
According to the publication, "As per the records maintained by MCA21 (A Ministry of Corporate Affairs website), the Axis Bank etc. have provided loans to SREI Infrastructure and Finance Limited to the tune of Rs 44,000 crore without any due diligence and verification of end use of the loan amount. This loan amount has been disbursed with sham receivables including related party transactions."
The portal alleged that the Kanoria brothers siphoned off money to the tune of Rs 16,000 crore into illegitimate and fake accounts through a well-planned strategy. "Huge amounts of money have been routed through transfer of funds to shell entities under false pretext, fraudulent documentation, creation of fake companies which existed only on paper, etc., which finally make its way to a SREI account. Through a well-planned strategy, the Kanoria family has smoothly funnelled over Rs 16,000 crores, one of the largest so far into their account," it said.
The Kanoria Family runs three main businesses, namely SREI Infrastructure Finance Limited (SREI), SREI Equipment Finance Limited (SEFL) and India Power Corporation Limited (IPCL). The SREI entities are funded by various banks, including Axis bank, while the IPCL is funded by government institutions like Power Finance corporation etc.
Meanwhile, SREI has said that it has filed a police complaint against the publishers for "criminal conspiracy of intentionally distorting facts for pecuniary gains". The companies stated that such reports are meant "to cause wrongful loss in terms of reputation and business in the eyes of investors, creditors and public at large".
"It has come to our notice that certain individual/group of individuals acting in collusion have hatched a pre-planned conspiracy whereby they have been circulating false, fictitious and imaginary content, by twisting facts and figures, through images, videos and article on the internet in a concerted manner through their website and on various other social media platforms with a view to cause wrongful loss in terms of reputation and business in the eyes of investors, creditors and public at large," a SREI spokesperson said.
The company has filed a police complaint with the cyber crime department and are pursuing legal recourse against the individuals/group behind the article. The case has been filed under sections 419, 420, 465, 468, 469, 471, 499, 500 and 120B of IPC and 66A, 69A of IT Act read with Information Technology (Procedure & Safeguards for Blocking Access of Information by Public) Rules, 2009 and such other relevant laws that may be applicable for such illegal and malicious activities, the spokesperson informed.
Ahead of the announcement, shares of Axis Bank ended Tuesday's trade at Rs 606.90, down 1.46 per cent, against previous closing price of Rs 615.90 on the Bombay Stock Exchange.