The Central Bureau of Investigation (CBI) has booked the then Jammu & Kashmir Bank (J&K) Chairman Mushtaq Ahmad Shaikh and 18 others for sanctioning ₹800 crore in loans to REI Agro Limited on the basis of fake documents.
Among those named in the case are several bank officials, REI Agro’s chairman Sanjay Jhunjhunwala, and its vice-president and managing director, Sandeep Jhunjhunwala, besides joint liability groups purportedly involving farmers.
The case was earlier registered by the J&K’s Anti-Corruption Bureau in 2019, following a preliminary enquiry into allegations that the Mumbai and Delhi branches of J&K Bank extended credit facilities to the company during 2011-13 in violation of the laid down rules. The accounts turned non-performing assets (NPA).
While the Mumbai branch of the bank had given ₹550 crore, the Vasant Vihar branch in Delhi had sanctioned and disbursed ₹139 crore.
The company had approached the branches for loans to make payment to paddy farmers as per the terms and conditions. The farmers were supposed to supply paddy to the company and in turn, the company had to sell the produce and get the remittance deposited in the bank as instalments against the advances.
The bank authorities and the company knew that the loan account had to be disbursed among the farmers for production of paddy. However, in a conspiracy with the company, the accused bank officials allowed disbursement of loans through joint liability groups, even though the company had already received the paddy.
As it turned out, these groups did not exist, their credentials and antecedents had never been verified by the bank. It is alleged that the objective of the accused persons was to divert the loan amounts for their own benefits. The bank had not taken any tangible security against the loans.
The first information report said: “As per records of the bank, the Vasant Vihar branch had in fact taken over the loan obtained by the company from IDFC and IREDA. The loan was taken over for the windmill already established by the company. This account too turned NPA along with the other accounts. The machines were sold by the bank and ₹54 crore was recovered from the company, but there is still an outstanding of ₹85 crore.”
