Top 100 frauds in PSU banks: gems and jewelry, aviation among 13 affected sectors

In the precious stones and jewelery sector, the CVC analyzes three cases of fraud committed after taking out a bank loan.

Even though PSU Bank's frauds are concentrated after the recent $ 1 billion fraud allegedly perpetrated by diamontiare Nirav Modi, a recent report by the Central Vigilance Commission (CSC) analyzes the top 100 frauds committed in 13 sectors, including that of Gems & Jewelery and Aviation. While bank fraud is a public concern because of high-profile cases involving Vijay Mallya and others, the CVC report does not mention any individual or company involved in the cases analyzed. In addition, the analysis only deals with frauds concerning public sector banks. The report was submitted to the RBI. The CBN recognized it as useful and disseminated it to public sector banks. We take a closer look at what the CVC has to say about fraud in the Gems & Jewelery and Aviation sectors.

Precious stones and jewels

In the precious stones and jewelery sector, the CVC analyzes three cases of fraud committed after taking out a bank loan. CVC explained that the companies had deliberately exaggerated the valuation of the diamonds with the dishonest intent to avail themselves of higher credit facilities with the lenders and to indicate the security coverage offered by the lenders. "The export invoices that remained unpaid on the due date were purchased by the consortium banks. The details of the debtors presented by the companies to the bank in order to benefit from the credit facilities seemed to be manipulated, fake and manufactured. They also used post-shipment financing by discounting the "export bills" of one of the member banks, while pre-shipment financing was obtained from another member bank by means of a standby letter of credit (SBLC), resulting in double funding, "noted the report of the CVC.

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The report also indicated that the bank was late because a due diligence report on the borrowers was not obtained prior to the submission of the renewal proposal. In addition, no credit assessment has been performed for these clients. "There was no evidence of delivery of the goods to customers … In the absence of any effective mechanism to monitor the movement of the proceeds of the expected export bill towards the liquidation of SBLCs in the member banks, the companies were handled cautiously and diverted the funds to their shell companies. "The report states that the lead bank of the loan consortium does not share the concerns and does not take into account the warning signals. mentioned in the rating reports of the companies.


In the aviation sector, CVC is analyzing a company that began trading in May 2005 and was a leading company with a 21% market share in domestic activities. The firm has been promoted by another group present in many countries. The CAC report states that the company in question misled the lending bank by deleting the facts in the financial statements and diverting the funds to related entities for purposes other than those for which financing had been made, reported The Indian Express. The company operates mainly leased aircraft for which a foreign entity (supplier) was created, which created fictitious invoices with inflated invoices, according to the daily report cited by CVC. The money the company owed to the leasing company would be disbursed, the rest being penned with the entity.

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