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Vikram Kothari conned 7 banks of Rs 3,695 crore, created fake companies to seek loans

Vikram Kothari conned 7 banks of Rs 3,695 crore, created fake companies to seek loans

The ED and the CBI cases lodged against the businessman say he defrauded seven banks by using loans meant to procure wheat and export of goods for various other purposes.

The Rotomac loan default case, pegged to be around Rs 3,695 crore, is throwing many surprises as the agencies' probe deepens. The ED and the CBI cases lodged against the businessman say he defrauded seven banks by using loans meant to procure wheat and export of goods for various other purposes. Of the total Rs 2,919 crore principal amount (excluding interest) given to Vikram Kothari's Rotomac, Bank of India loaned Rs 754.77 crore, Bank of Baroda Rs 456.63 crore; Indian Overseas Bank Rs 771.07 crore; Union Bank of India Rs 458.95 crore; Allahabad Bank Rs 330.68 crore; Bank of Maharashtra Rs 49.82 crore; and Oriental Bank of Commerce Rs 97.47 crore. As the agencies investigate Vikram Kothari's money trail, cases have been lodged against his wife Sadhna Kothari and son Rahul Kothari, and several bank officials who allegedly helped him by hiding the information about his fake companies, or conniving with him.

The CBI is conducting searching at his house and office premises in Uttar Pradesh but no arrests have been made so far. Though rumours had emerged about Kothari fleeing the country, just like diamond jeweller Nirav Modi, he said he was not willing to leave the country, which he loved, and that it's just a case of 'loan default'. "First of all, it is not a scam. I am not going anywhere. I am an Indian citizen and am very much in my hometown. Though banks have declared my company as a non-performing asset (NPA), I am not a defaulter. The matter is still sub judice with the National Company Law Tribunal (NCLT). I am regularly in touch with the banks and am constantly cooperating with them. I availed the loans and will repay them soon," he said.

The inquiry reveals Vikram Kothari used different methods to seek loan from these banks. According to CBI sources, in clear violation of FEMA (Federal Emergency Management Agency) rules, he used loans sanctioned by banks for export orders to help his Kanpur-based company. He created many fake companies by furnishing forged documents to seek loans from these banks, added sources. Allahabad Bank, Bank of India, Bank of Baroda, Indian Overseas Bank and Union Bank of India compromised their rules to sanction loans to Rotomac, sources said.

Kothari took a loan of Rs 485 crore from Mumbai-based Union Bank of India and a loan of Rs 352 crore from Kolkata-based Allahabad Bank. A year later, Kothari has reportedly not paid back either the interest or the loan. Last year, Bank of Baroda (BoB), a consortium partner declared pen manufacturer Rotomac Global Pvt. Ltd. as 'wilful defaulter'.

The company then moved the Allahabad High Court seeking removal of its name from the list of wilful defaulter. A division bench comprising Chief Justice D B Bhosle and Justice Yashwant Verma had passed the order on a petition filed by the company, contending that it has been wrongly declared a wilful defaulter by BoB despite having "offered assets worth more than Rs 300 crore to the bank since the date of default".

Rotomac was declared a wilful defaulter vide an order dated February 27, 2017 passed by an authorised committee, as per the procedure laid down by the Reserve Bank of India. The development comes less than a week after Punjab National Bank (PNB) had detected a USD 1.77 billion - about Rs 11,400 crore - scam wherein Modi allegedly acquired fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders. The PNB fraud pertains to issuance of fake LoUs to companies associated with billionaire jeweller Nirav Modi by errant PNB employees, which enabled these companies to raise buyers' credit from international branches of other Indian lenders. Last month, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 280.7 crore were first issued on January 16. At the time, PNB had said it was digging into records to examine the magnitude of the fraud. In the complaint, PNB had named three diamond firms - Diamonds R Us, Solar Exports and Stellar Diamonds - saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers.

(With PTI inputs)