Three people were sentenced to five years in prison by a special Central Bureau of Investigation (CBI) court for defrauding Bank of India out of Rs.10.27 crore in a significant decision. In the case, which began in April 2012, a businessman, a senior bank official, and an intermediary forged paperwork in order to obtain credit from the bank without authorization.
Case Registered in 2013 by CBI
The CBI’s Economic Offences Wing registered the case on February 2, 2013. Those named in the case included:
- Nikhil Patt, a businessman
- Damodar Kamath, then senior manager (credit) at Vijaya Bank
- Sooraj Tayade, an agent
- Four other accused, including two who are still absconding, one who passed away during the trial, and one who was acquitted due to lack of evidence.
How the Bank Fraud Happened
The complaint came from the Deputy Zonal Manager of Bank of India’s Mumbai North Zone. According to the investigation, the fraud was carried out using fake Letters of Credit (LCs) – financial instruments banks use to guarantee a buyer’s payment to a seller.
Kamath, the bank manager, issued four such fake LCs worth a total of Rs.10.27 crore. Here’s how the LCs were misused:
- Two LCs worth Rs.7.25 crore were issued in the name of Madhav Trading Corporation, a company owned by Nikhil Patt.
- One LC was issued to Siddhi Graphics, owned by Sameer Shah.
- The fourth LC was in the name of Parmar Trading Corporation, owned by Chandrakant Desai.
Shah and Desai are still on the run.
Misuse of Funds
Once the fake LCs were processed, a Bank of India officer named T. Gopala verified and cleared them. The money was then credited to the accounts of the three companies involved.
However, the money was not used for any business purpose. Instead, it was transferred across different accounts and withdrawn in large amounts by the accused.
The investigation revealed that out of the Rs.10.27 crore:
- Rs.1.02 crore was transferred from Madhav Trading Corporation to Suraj Kumar Trading, a company owned by Sooraj Tayade.
- Another Rs.15 lakh was directly transferred to bank manager Kamath, suggesting his active role in the fraud.
This case is a serious example of how banking frauds can affect public financial institutions. The court’s decision sends a clear message: those who misuse their position and cheat the banking system for personal profit will face strict legal consequences.
