CBI Investigations Reveal Fraudulent Loans Worth Rs 6.2 Million Sanctioned Under MUDRA Scheme

The Central Bureau of Investigation registered a fresh case of fraudulent loans being sanctioned under Prime Minister Modi flagship scheme Micro Units Development and Refinance Agency (MUDRA) worth Rs 6.2 million. This was reported at the Punjab National bank (PNB). PNB is already reeling under the scam of Rs 114 million.

The case of Rs 6.2 million scam came to fore during the Central Bureau of Investigation (CBI) investigation of the Nirav Modi and Mehul Chowksi scam causing Punjab National Bank a loss of Rs 114 million.

Fraudulent sanction and disbursement of 26 Mudra loans at PNB

In a case filed on February 21, CBI alleges that a senior manager at PNB’s Barmer branch in Rajasthan has “dishonestly and fraudulently sanctioned and disbursed 26 Mudra loans” between September 2016 and March 2017, causing a loss of Rs 6.2 million to the public sector bank.

CBI has alleged that PNB sanctioned the MUDRA loans “without conducting meaningful pre-inspection or physical inspection of spot of business or residence and without ascertaining end use of the loan amount or creation of assets from the loan amount.”

It was found that no assets were created out of the loans sanctioned under MUDRA.

CBI alleges major lapses on PNB’s part. It is alleged that Inder Chand Chundawa, the then senior manager of PNB Barmer, did not carry pre-loan inspections and also did not verify whether the assets were created out of the sanctioned loan.

It was found that only in one out the 26 loan cases that “appeared to fake and prepared on table at office”, a field verification was conducted.

Although the bank can sanction loans to people residing within the 25 KM radius of the branch, some borrowers were found be residing as far as 100 KM from Barmer.

Five out of 26 loan accounts have now turned into non-performing assets as loans were not utilised to create assets. CBI said ,”The bank cannot recover the outstanding amount of R.6.2 million as no security is available with the bank. Thereby, the suspect public servant caused wrongful loss of Rs.6.2 million to the bank and corresponding wrongful gain to himself and other unknown persons.”

On further investigation, it was found that PNB’s deputy general manager at Jodhpur had suspended the section officer of the branch when an inquiry was made in this regard. However, he was later on revoked and is presently posted at PNB Abu Road branch in Rajasthan.

MUDRA Scheme

Pradhan Mantri Mudra Yojana (PMMY ) is a flagship scheme of Government of India with the aim of extending affordable credit to any citizen who has a business plan for a non-farm sector income generating activity and whose need is less than Rs 10 lakh. He/she can directly approach a bank for availing the MUDRA loans.

This was launched with the aim of providing unsecured loans to eligible candidates with the objective of boosting self-employment.

MUDRA Bank is not a separate bank (like SBI etc). It is a government financing scheme to provide business loan to new small businesses in India. To get business loan under PPMY the candidate has to contact the nearest Public/ Private sector bank. MUDRA will be operating as a refinancing institution through State / Regional level intermediaries. MUDRA’s delivery channel is conceived to be through the route of refinance primarily to NBFCs / MFIs, besides other intermediaries including Banks, Primary Lending Institutions etc. The rate of interest will be fixed by the institutions time to time based on guidelines from the RBI. After the sanction or disbursement of loan, the borrower is required to create an asset using the money that acts as a security to the bank against the sanctioned loan.