CBI has filed a case against hotel directors in Rs. 75 crore fraud case of PSU bank

The Central Bureau of Investigation (CBI) has brought a case against two former directors of Maha Associated Hotels Pvt Ltd in a significant effort to combat bank fraud.  Both Yash Deep Sharma and Laxmi Narayan Sharma, who hail from Hyderabad's Gachibowli neighborhood, are charged with defrauding Punjab and Sindh Bank of Rs.75.44 crore.

 Avdhesh Narain Singh, the zonal manager of the bank, filed a complaint, which prompted the CBI's Bank Security and Fraud Branch (BSFB), located in Delhi, to file the FIR.  Charges under IPC Sections 120-B (criminal conspiracy) and 420 (cheating), together with pertinent provisions of the Prevention of Corruption Act, are included in the FIR.  The case also involves a few unidentified private citizens and state employees in addition to the two directors who have been named.

Actual Case

The bank's complaint claims that in 2013, Maha Associated Hotels Pvt Ltd borrowed Rs.75 crore from the Connaught Circus Branch of Punjab and Sindh Bank in New Delhi. In Neemrana, Rajasthan, the loan was intended to finance the building of a hotel, a plaza with food and entertainment, and a hospitality training academy.

However, the bank has claimed that the monies were misappropriated and not used for these initiatives. On December 31, 2016, the account was designated as a non-performing asset (NPA) due to inadequate financial management and loan non-repayment.

What Happened

Maha Associated Hotels Pvt Ltd is not listed as an accused party, despite the fact that the directors are named individually in the complaint.  Under the Insolvency and Bankruptcy Code (IBC), the Jaipur-based business underwent the insolvency process.  A resolution plan for Rs.11.5 crore plus charges for the Corporate Insolvency Resolution Process (CIRP) was authorized by the National Company Law Tribunal (NCLT) in Jaipur on August 13, 2024.  Regretfully, the bank had little to no security available to recoup the outstanding loan balance.

Recovery of Loan Amount

The bank had obtained a mortgage on Neemrana land and other fixed assets in order to secure the loan when it was initially granted.  However, the bank used the SARFAESI Act to take symbolic ownership of the property in 2017 after the borrowers were unable to repay.  The healing process is still ongoing in spite of this.  The bank requested more than 104 crore in a recovery claim submitted to the Debt Recovery Tribunal (DRT).  That lawsuit has not yet been resolved.

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Public Sector Banks Surpass Private Banks in Loan Disbursals

In India, government banks have recovered significantly. Public sector banks (PSBs) have provided more loans than private banks for the first time in fifteen years. This represents a significant shift in the nation's banking industry. In the personal loan market, where government banks are currently lending more quickly than private banks, the expansion has been particularly robust. This change demonstrates how actively and competitively government banks are responding to consumer demands. For the first time in more than ten years, public sector banks have surpassed private banks in terms of overall loan distribution, making this accomplishment a significant turning point. Customers' increasing faith in government banks and their better performance in recent years are reflected in it.

Reason behind this

According to the Reserve Bank of India (RBI) and other financial reports, one of the main reasons of increase in loan disbursals of government banks is that private banks like HDFC Bank and Axis Bank have slowed down their lending. In recent years, private banks usually led in giving loans, but now they are lending less compared to public sector banks.

The fact that government banks are more active in managing loan programs started by the federal and state governments could be another factor. These include programs that give small workers and merchants financial support, such as the PM Vishwakarma Yojana and the PM Svanidhi Yojana. Public sector banks have supplied the majority of the loans under these schemes, with private banks participating in very little of them. This may be a major factor in the fact that public banks are currently lending more money than private ones.

How Much Have Public Sector Banks Grown?

By December 2024, public sector banks recorded a strong 17% growth in personal loan disbursals, while private banks managed only 10% growth in the same category. This clearly shows that public banks are stepping up and winning borrower trust in the retail loan space. Public sector banks aren’t just leading in personal loans—they’re also ahead in industrial and service sector loans.

• Industrial loans: Public banks provided 60% of the total ₹37.9 lakh crore
• Service sector loans: They contributed 56% of ₹49.9 lakh crore
• Personal loans: Public sector banks disbursed 52% of ₹51.1 lakh crore

This wide lead proves that PSBs are playing a much larger role in supporting India’s economy across sectors.

Credit Growth vs Deposits

Interestingly, for the fourth year in a row, banks have given out more loans than the money they have received through deposits.This kind of trend is very rare and has happened only two times in the last 50 years. Most of the money banks received as deposits came from Fixed Deposits (FDs), which made up 86% of the total increase in deposits. As of December 2024, half of all the money kept in banks is now in the form of term deposits like FDs.

Home Loans

Government banks are also doing very well in giving home loans, especially in smaller cities (Tier-3) and rural areas. In the financial year 2024–25, public sector banks gave out 46.4% of all home loans, up from 45.1% the year before.Meanwhile, private banks saw a small drop in their share of home loans—from 54.9% to 53.6%. During this period, public banks gave out ₹2.1 lakh crore in new home loans, which makes up 56.1% of all home loans given that year.

Non-Resident Indians (NRIs)

Deposits by Non-Resident Indians (NRIs) grew well in the financial year 2024–25. Their total deposits increased by 10%, reaching ₹14.16 lakh crore by March 2025. About half of these deposits are in fixed deposits (FDs), which shows that NRIs still have strong trust in India’s public banks for saving their money for the long term.

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RBI imposed penalty of Rs.63.60 lakh on PSU Bank

Union Bank of India was hit with a ₹63.60 lakh fine by the Reserve Bank of India (RBI) for not meeting certain regulatory standards. The May 23, 2025, penalty order lists non-compliance with RBI's rules on collateral-free agricultural loans as well as violations of Section 26A of the Banking Regulation Act, 1949. 

The decision comes after the RBI examined Union Bank's financial situation as of March 31 in 2023 and 2024 as part of its regular inspections under the Statutory Inspections for Supervisory Evaluation (ISE) program. 

Two significant infractions were found during the inspections: 

Delay in Transfer of Depositor Education and Awareness Fund: 

The bank did not make the required timely transfer of eligible unclaimed funds to the Depositor Education and Awareness (DEA) Fund.

Based on these findings, the RBI issued a show-cause notice to the bank, asking it to explain why a penalty should not be imposed. After reviewing the bank’s written response and oral submissions during a hearing, the RBI concluded that the violations were valid and warranted financial penalties.

The RBI emphasized that the penalty is strictly related to regulatory compliance shortcomings and does not question the legality or validity of the bank’s agreements with its customers. It also noted that this action is without prejudice to any further actions that may be taken in the future.

This enforcement reflects RBI’s ongoing commitment to ensuring banks adhere strictly to rules, particularly those aimed at protecting depositors and supporting priority sectors like agriculture.

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Fraud found in PSB & Private Banks as per AIBEA data

 EFFICIENCY PARAMETER OF BANKS BASED ON NO. OF FRAUDS REPORTED

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Attack on the Bank of India(BOI) Loan Recovery Team

A Bank of India team was violently attacked in Farrukhabad during what should have been a routine debt recovery exercise, underscoring the increasing difficulties that bank officers occasionally experience in the course of their work. In a matter of minutes, the normally tranquil environment around the Sai Dham Temple at Panchal Ghat descended into chaos.

Under the direction of the branch manager, the bank's debt recovery team had gone to collect a pending loan balance of about ₹4 lakh from a local borrower. Avnish, a PRD jawan and inhabitant of Rakabganj Khurd in the Maudarwaja area, accompanied the squad. During the visit, he was responsible for maintaining order and ensuring security. But things didn't work out as expected. People who were thought to be the borrowers who had refused to pay the debts confronted the crew as they got closer to the scene. A startling change in circumstances ensued. Avnish was allegedly grabbed by the accused and beaten. The bank manager and other team members had to leave the area in their car since the situation rapidly got out of hand.

Avnish was later taken to the hospital for medical examination. The police station under whose jurisdiction the incident falls—Qadri Gate police station—has registered the case and launched an investigation. Preliminary statements from Avnish suggest that the accused deliberately attacked the team to avoid repaying the loan.

This incident raises serious concerns about the safety of bank officials and staff engaged in fieldwork, especially in loan recovery. Bank personnel are increasingly facing resistance, and sometimes violence, while performing their duties. Though they operate within legal frameworks, such situations pose not only a professional hazard but a personal one too.

The case also sheds light on the need for better support mechanisms and legal protection for recovery agents and officers. It emphasizes the importance of ensuring the safety of those working on the frontlines of the financial system.

Authorities have assured that strict action will be taken against the accused. In the meantime, this incident should serve as a wake-up call for financial institutions to review their recovery strategies and for law enforcement to provide necessary backup when required.

Loan default is a serious issue—but violence is never the answer. Respecting the rule of law and engaging in peaceful resolutions must always be the priority, both for banks and for borrowers.

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Private Banks posts Net loss of ₹2,328 crore in Q4

For the January–March period, Mumbai-based private lender IndusInd Bank Ltd. reported a net loss of ₹2,328 crore due to stress in the microfinance portfolio and previously documented accounting irregularities that negatively impacted the balance sheet. According to a CNBC-TV18 poll, the net loss was ₹514 crore. The findings were released on Wednesday, May 21, after market hours. 

For the first time in two decades, IndusInd Bank has disclosed a quarterly financial loss. IndusInd Bank last declared a loss during the fourth quarter of the 2006 fiscal year, when Bhaskar Ghose was the bank's chief executive officer. The lender has only ever reported a loss once in its trading existence, and that was in March 2001.

IndusInd's Net Interest Income (NII) or core income declined by 43.4% from the same quarter last year to ₹3,048 crore, which is lower with the CNBC-TV18 poll of ₹4,762.4 crore.

Asset quality for the lender deteriorated on a sequential basis, with Gross NPA at 3.13% from 2.25% in the December quarter, while net NPA for the quarter stood at 0.95% from 0.68% in the previous quarter.

In a separate filing, IndusInd Bank stated that the Internal Audit Department submitted a report on May 20, where an amount of ₹172.58 crore was incorrectly recorded as fee income in the Microfinance business over three quarters ending December 31, 2024 and was reversed in the fourth quarter.

IndusInd Bank's advances grew by 1.3% during the January-March period on a year-on-year basis, which was the weakest growth in 17 quarters. On the sequential basis, loan growth declined by 5.2%, which was the biggest decline in 37 quarters or more.

Deposits grew by 6.8% during the March quarter, in comparison to the year-ago period to ₹4.11 lakh crore. This was the weakest deposit growth reported by the lender in the last 19 quarters.

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Useful tips to recover bad loans/NPA Acs

1.Every branch should maintain a master file having the lists of eligible star sanjeenvani accounts for the year, monthly sascal and NPA borrowers. The Lists should be sorted village wise. While going for recovery, our focus should not to cover many villages, rather to cover a single village and meet with each and every single account of that village coming under the three lists.

2. Ensure to get the mobile phone number of the borrower immediately. If the borrower is not available, then get their family members contact numbers.  Please make a note if there is any landmark near the borrower’s residence. Ensure to update these details in Finacle DC for future purposes.

3.Whosoever is going for recovery, always carry with yourself the below set of things – Mobile number updating forms , L444C or any other loan renewal document , OTS offer letter , Cash deposit and withdrawal challans. This comes easy to deal with borrowers.

4. What I believe that there is no use of visiting the same customer again and again , Identify and try to read his mind during the first visit only  that what type of customer he is and what’s the way to handle him in future like follow up through phone only , regular visits , settlement ,any legal action etc.

5. Whatever is the promises and dates of borrowers, note their words , take their signature and after returning to the branch, update the same in the master file so that whosoever is the next person going for recovery, has some baseline. Also try to know what will be the source of repayment according to the customer. If it is karkhana or any other person, try to contact them also.

6.Whosoever is going for recovery, avoid going inside the house and ensure that the communication should be outside the house only so that the passers and neighborhoods see that the bankers visited that particular household. Some borrowers are very sensitive about their images.

7. At least in a week, use Hacs menu and figure out the credit balances present in the saving account of NPA accounts. Transfer the balances immediately and reduce the NPA figures of your branch.

8. Also on daily basis, before proceeding for day end have a look at the cash vouchers and check if there any recovery in NPA account and parked in the office account . If it is so, immediately appropriate it to the account and reduce the NPA figures of your branch.

9. If at some day you feel that today Karkhana is releasing sugar payments or employees will get salary today and possibly customer can withdraw money from ATM, then at frequent intervals run menu – LADSP (LOAN DEMAND SATISFACTION PROCESS) . This will satisfy the demand raised in the loan account from the saving account of the customer and no need for waiting till day end.

10. As soon as you receive the first sascal list from the controlling office , address the technical sascal first as it will bring down the figures of your list and of course ,lesser will be the pages of sascal, lesser will be our tension.

11. Always understand Time value of money, There are many cases where we unnecessarily wait to get more money and later we lose that money also what we were previously getting. It’s the need of the hour that we cannot wait and increase the age of NPA unnecessarily. Always remember, A stitch in time saves nine.

12.  You can only exercise your power when you know what is your power ?  Modified NPA management policy and Liberal OTS schemes are now available. Be decisive, get the thorough study and utilize it fully.

13. I understand that it’s extremely difficult to initiate legal action for every NPA account. But at least Pick 2,3 strong cases and start the legal action. If it is Sarfaesi , immediately go for 13(2) , pre possession and drag it till the day of paper publication and E auction. Let there will be a fear created amongst the borrowers that we bankers can do everything when it comes to saving our mother institution. If every branch will do at least 2,3 such cases , many NPA borrowers will upgrade their account due to fear . Also publicize your action in such a manner that it will reach in the ear of each and every NPA borrower. Do less Sing more.

14.  Education loan students are very image conscious. When we go to their residence for recovery, often they will be at some other place for job. Try to take out the details of their job and company. After returning, spare some 10-15 minutes and try to figure out the company’s profile by using the social networking. If possible, try to contact them through their official email ids.It will create a fear in them of losing the job as these companies are very conscious of their images .

15. There are many customers of the branches who require regular visits and they wait till the last day and every time they come in sascal, intimate them that whatever the cost involved in the regular visits, bank will recover them from their loan account as follow up charges. Make a note of their visits,take their signature and if possible, recover them also in some cases as follow up/notice charges.

16. At last I would like to say that recovery is a long continuous effort. *Focus should be on recovery not on reporting* . Most of the times , efforts for the day will bear fruits in the next week and possibly credit goes to the person who will visit the borrower on that day . But that should not bother us. After all we all work for the same purpose.

Source-Blog reader

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Vigilance investigation finds Dormant Account Scam of Rs. 14 lakh in SBI

A scam of ₹14.60 lakh has come to light at the State Bank of India (SBI)’s Personal Banking Branch (PBB) located on Mall Road, where a dormant account was fraudulently activated. Now, the bank’s Vigilance Department has started a full-scale investigation into the matter.

Dormant Account Misused to Withdraw Money

According to reports, a dormant account belonging to Shiromani Yadav, a resident of Civil Lines, Kanpur Nagar, was suddenly activated. This account had been inactive since 2022. Shockingly, ₹14.60 lakh was withdrawn from it after it was reactivated on March 25, 2025, through a fake e-KYC process.

Accused Deputy Manager Suspended

A Deputy Manager of the bank, who is also a member of the SBI Officers Association, is accused of being involved in the scam. He has been suspended while investigations are underway. Statements from the bank employees and officers who were working at the branch during that period have also been recorded.

Fake Aadhaar and Address Documents Under Probe

During the initial internal inquiry, it was found that fake Aadhaar cards and false address documents were used in the process of reactivating the account. These documents are currently being verified. Earlier, the case was being looked into by the Regional Manager of Lucknow and the Assistant General Manager of Kanpur. But now, Vigilance authorities have officially taken over the case.

CCTV Footage and Employee Statements Examined

As part of the investigation, CCTV footage from the Mall Road PBB branch and the World Bank branch has been examined. Officials from the Vigilance Department have also questioned the main accused and recorded statements from several employees from both branches.

Anonymous Tip Uncovered the Scam

The scam first came to light after an anonymous letter was sent to the Chief General Manager of SBI on May 1. The letter detailed how ₹14.60 lakh had been fraudulently withdrawn from the dormant account and named the Deputy Manager and other employees involved.

Interestingly, when internal discussions about the fraud began, the money was returned to the account on April 11, and the account was again deactivated on April 15—possibly in an attempt to cover up the fraud.

Investigation Report Expected Soon

Vigilance officers are now preparing their final report based on the documents, CCTV footage, and employee statements. This report is likely to be submitted to senior officials soon.

Source - hellobanker

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PSU Bank Branch Manager sent to 3 years Jail by CBI

 

In connection with a bank fraud case, a special CBI court in Ghaziabad has convicted two people—a private individual and a former bank manager of Union Bank of India—to harsh jail. Manoj Srivastava, the former Branch Manager of Union Bank of India's SSI Branch in Noida, was given a three-year severe prison sentence and a ₹5 lakh fine by the Special Judge for CBI Anti-Corruption proceedings. Private citizen Raj Kumar Samanta, his co-accused, received a ₹10 lakh fine in addition to four years of hard labor. The court fined the two accused a total of ₹15 lakh.

The case was filed by the Central Bureau of Investigation (CBI) on December 14, 2010, in response to claims that Manoj Srivastava, the branch manager, had processed a loan for Raj Kumar Samanta fraudulently. The bank suffered an unjustified loss as a result. On September 29, 2012, the CBI filed a chargesheet against both accused following a thorough investigation. Following the trial, the court imposed the appropriate sentence after finding both defendants guilty of criminal misconduct and cheating.

This judgment underscores the CBI’s continued crackdown on banking fraud and misconduct by public servants in collusion with private individuals.

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LIC increases its stake in Bank of India(BOI) to 8.38%.

As of May 9, 2025, the Life Insurance Corporation of India (LIC) now owns 8.38% of Bank of India (BoI). In a regulatory statement to the stock exchanges on Tuesday, Bank of India provided this update. Over the course of almost four years, LIC has acquired an additional 2.026% share in Bank of India. 

 The purchase activity occurred from September 2, 2021, until May 9, 2025. LIC owned 6.35% of the public sector bank prior to this rise. Its overall position has now increased to 8.38% as a result of the latest acquisitions. This action demonstrates LIC's ongoing desire to solidify its place in the Indian public sector banking market.

Impact on Bank of India Shares

Following the disclosure, shares of Bank of India saw a positive response in the market. The stock closed at ₹112.55 on the Bombay Stock Exchange (BSE), which is a 2.27% rise compared to the previous trading day

Why This Matters

LIC is India’s largest institutional investor and plays a significant role in the Indian financial market. When LIC increases its stake in a company, it is often seen as a positive sign of confidence in that company’s performance and future growth.

This increase in LIC’s stake could signal strong trust in the stability and growth of Bank of India, which is one of the major public sector banks in India.

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