Biotor Scam: Four banks have exposure of Rs. 500 crore

Source :NDTV:Profit:Vijay Iyer, November 21, 2011 (Mumbai)

A Central Bureau of Investigation (CBI) probe into the Biotor Industries scam has found that four nationalized banks namely Bank Of Maharashtra, Central Bank of India, Oriental Bank of Commerce and IDBI Bank have violated KYC or Know Your Customer norms.

 This means banks have not gathered adequate information about customers as mandated under these norms. 

Biotor Industries had sought loans from banks for procuring raw material from the farmers directly. Loans were then alleged to have been transferred to bank accounts opened in the names of "fictitious" farmers.

According to the Central Bureau of Investigation, these banks have opened 8000-9000 accounts in fictitious names and transferred loans into these accounts. The preliminary investigation has concluded that the loans will become Non Performing Assets (NPAs). 

According to the CBI's Banking Fraud and Securities cell that is investigating Biotor Industries, the four banks have an exposure of Rs. 500 crore to Biotor Industries scam that is estimated to be Rs. 1,300 to Rs. 1,500 crore.

Oriental  Bank is said to have an exposure of Rs. 120 crore, while Central Bank of India, IDBI and Bank of Maharashtra have an exposure to the tunes of Rs. 120 crore, Rs. 115 crore, and Rs. 50 crore respectively.

The CBI is now set to question the senior management of these four banks and file a charge sheet soon.

The scam came to light five months back, when Bank of Maharashtra had filed an investigation into the issue. It was subsequently taken up by the CBI.