Rotomac Owner Took Rs 2,919 Cr Loan To 'Import Wheat' That Was Never Imported
Vikram Kothari, owner of Rotomac Pens, and his family members who are accused of Rs 3,965 crore fraud are being questioned by the CBI. It has come to light that the loans sanctioned to Kothari were not for his pen business, but for importing wheat. However, it was not used for importing wheat, instead was moved to another company. Later, the money was forwarded to Rotomac and its sister companies.
Sanctioned loan misused to utilise differential interest rate
Kothari and his family are being questioned by the Central Bureau of Investigation (CBI) following a complaint by Bank of Baroda, alleging that Kothari had taken a loan of about Rs 2,919 crores from seven banks, including Bank of India, Bank of Baroda, Indian Overseas Bank, Oriental Bank of Commerce, Bank of Maharashtra, and Union Bank of India, but failed to pay back even the principal amount.
Talking to The Print, a CBI official said,”In the complaint given to us by Bank of Baroda, it was alleged that Rotomac cheated a consortium of seven banks by syphoning off bank loans to the tune of Rs 2,919 crore. This is just the principal amount and does not include the interest liabilities of these loans.”
Sources say that Bank of India sanctioned a loan of Rs 754.77 crore, Bank of Baroda loaned an amount of Rs 456.63 crore, Indian Overseas Bank gave Rs 771.07 crore loan, Union Bank of India sanctioned a loan of Rs. 458.95 crore, Allahabad Bank gave Rs 330.68 crore as loan, Oriental Bank of Commerce and Bank of Maharashtra sanctioned Rs 97.47 crore and Rs 49.82 crore loans respectively.
The loan which was sanctioned to Kothari for import of wheat from a Singapore-based company, Bargadia Brothers, was not used for the aforementioned cause, instead was used to illegally utilise the “Differential Interest Rate” on local and foreign currency. For instance, Bank of Baroda sanctioned a loan of Rs 34 crore for an export order from Singapore-based Starcom Resources PTE for a supply of 15,700 tonnes of wheat. This amount was remitted to the account of Bargadia Brothers Pvt Ltd, but Rotomac received an amount of Rs 16 crore immediately after this, the CBI FIR claimed. No export record was ever found.
Calling this a criminal breach of trust, violation of guidelines and misappropriation of funds, an official told The Print,“Money was sought from the banks for importing wheat from a Singapore-based company, Bargadia Brothers. But when it was sanctioned, the money was not utilised to buy wheat. The money first went to Bargadia brothers and then came back to Rotomac. No export order was ever executed. This round-tripping of money amounts to misappropriation of funds, criminal breach of trust, and violation of FEMA guidelines.”
Huge losses incurred by the Indian banking system
This scam comes close on heels of the Nirav Modi-PNB scam, where jeweller Nirav Modi and his uncle Mehul Chowksi failed to repay an amount of over Rs 11,300 crore that they owed to the Punjab National Bank.
The State Bank of India has written off bad loans of Rs 20,339 crore for 2016-17 and the public sector banks have collectively written off bad loans worth Rs 81,683 crore for the fiscal.
Even when Kothari, his wife and his son are questioned by the CBI, Kothari refused to call it a scam, saying, “First of all, don’t call it a scam. Also, I am not leaving the country and I am very much in Kanpur. Banks have declared my company non performing asset (NPA), but not a defaulter. The matter is still sub judice with National Company Law Tribunal (NCLT). I have taken loans and will repay it all soon.”
On the other hand, Nirav Modi told PNB that the “overzealousness” of the bank has shut the doors on his ability to pay the dues.
As of March 2017, the gross bad loan mounted up to Rs. 7.11 lakh crore, of which, twelve accounts were responsible for 25% of the total amount that is Rs 1.78 lakh crore.