LIC Housing Finance and banks are suspected to have given fake loans to individuals which landed in the accounts of a few builders. The deals were supposed to have been arranged by FII-funded Money Matters Financial Services
Following the raids by the Central Bureau of Investigation (CBI) on Money Matters Financial since last night, news that was broken by this website early today (Money Matters Financial raided by Central Bureau of Investigation), the CBI conducted raids on LIC Housing Finance (LICHF) and three banks during the day.
The CBI said it busted out a racket where a private financial services company, its chairman and managing director (CMD) and other associates were bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions.
Officers of top management and middle management of various public sector banks and financial institutions, Bank of India (BoI), Central Bank of India (CBoI), Punjab National Bank (PNB), Life Insurance Corp of India (LIC) and LICHF were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions, the CBI said in a release.
The investigation agency said it arrested R Ramchandran Nair, chief executive-LICHF, Naresh Chopra, investment secretary-LIC, RN Tayal, general manager-BoI, Maninder Singh Johar, director-CBoI, Venkoba Gujjal, deputy general manager-PNB as well as Rajesh Sharma, CMD-Money Matters and Sanjay Sharma and Suresh Dattani, both employees of Money Matters. All the eight arrester persons are remanded to custody till 29th November, CBI said.
Moneylife learns that officials of LICHF, BoI, CBoI and PNB had given out housing loans to a few hundred individuals, who were dummy borrowers. These borrowers existed only paper and were propped up by a few builders. The money was then transferred from the accounts of these individuals to these builders. It also appears that LICHF was charging a high rate of interest for these fake loans which was reflected in higher profits.
Driven by high profits over the last few quarters, the LIC Housing Finance stock has been a spectacular performer over the last 20 months. From a low of Rs178 at the end of March 2009, the stock had hit Rs1,496 on 29th September this year, a rally of over 1000%. Over the same period, market leader Housing Development Finance Corporation (HDFC) rose from a low of Rs223 to a high of Rs780, a gain of 350%.
As rumours of the LIC HF scam surfaced, the stock took a big battering. By the end of the day, it was down 18% and there were no buyers for the stock. Since the Moneylife report early morning, the Money Matters Financial stock too was sold heavily during the day and the stock was locked in the lower circuit. It appears that the cases of Money Matters and LIC HF and the banks are linked. CBI suspects that Money Matters was arranging these deals between the banks and the builders. According to our sources, bank officials and others were being gifted 2 kilograms of gold this Diwali.
It may be recalled that less than two months ago, Money Matters raised more than Rs400 crores foreign institutional investors, a deal arranged by India Infoline.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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But on the other hand I am a bit confused and suspicious.
Ever since I followed the articles of Madam Sucheta Dalal, I never became a gullible or innocent investor?
Thanks once again for aligning and making me a member of your organisation.
CBI should conduct the inquiry against the Ex DMD and other senior officials including the present DMD, Executive Directors, Board of Directors, and President - Risk for their vested interest in financing to this project and holding disproportionate wealth they have accumulated in their family members name.
Money Matters Financial Directors including other officials Mr Pawan Bansal ( ex employee of Axis Bank as reported in today economic times ) and company accounts are being operated through Axis Bank
CBI Economic Offence Wing is already doing the inquiry in to similar type of fraud in Priority sector lending of 150 crores at Bhopal and Jabalpur and also at other major centers.
They were also involved in multi crore contract farming fraud similar to LICHF i.e landing on a fake KYC documents without the existence of that person. The bank has 1200 plus crores of exposure to Microfinance Companies which is deteriorating its asset quality.
The senior functionaries of the banks are putting up papers or they are being moved to other non performing departments. One side the bank is giving the suspension / termination letters to employees and other side they are accepting the resignation letters from those suspended senior employees and giving them relieving letter. Its an eyewash to the general public, and our role is to educate the investors and protect their interest. Its upto you to take a call.
If i am able to get some valuable views, it would be of great use to me.
Bankers have gone beyond the Laxman Rekha, with a sole aim to create personal wealth by over financing the corporate and individuals by adopting all types of unethical and fraudulent practices. Lets wait and watch how long they will be able to escape from the scanners of CBI, EoW & CVC, as the Bank Management has failed to implement the concept of Staff Accountability and Corporate Governance in its true spirit since inception and they want to loot the investors / depositors money for personal benefits.
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