Another bank fraud? Borrowers misuse SBI loan of Rs 32 mn to produce a film

File photo of State Bank of India building
In yet another fraud on a public sector bank, as many as 13 people including a kabaddi player got a loan of Rs 32.9 million for buying top-end cars, but 'misused' the money for producing a Tamil film.

When the fraud came to light, the Madras High Court, on a plea from the State Bank of India (SBI), granted an interim injunction against the movie's release.

The fraud was done with the connivance of an auto loan counsellor who allegedly hacked the bank's computers to facilitate the loan sanction and its disbursement.

Justice C V Karthikeyan passed the interim order on a civil suit of the lender restraining White Screen Productions (WSP) from releasing the movie till March 16, 2018.

The production house is represented by kabaddi player Raja and he is among the 13 borrowers.

According to the SBI, 13 persons including Raja of WSP got a total loan of Rs 3,29,71,000 for purchase of various types of cars.

The loan papers were submitted through an auto loan counsellor, D Chitra, who handed over the relevant documents including the KYC (know your customer) of the applicants to the lender.

According to the bank, Chitra gained confidence of the branch officials and got acquainted with the loan sanction and disbursement norms. She submitted misleading facts and dubious documents to the authorities.

Through fraudulent methods, she accessed the operating system of the computers by hacking the user ID and password of the officials.

Also, she fraudulently diverted the loan amount directly to the borrowers instead of crediting it to the account of the car dealers.

Subsequently, the loan proceeds were misused for film production by the borrowers and no cars were purchased by the people who procured loans through her.

Fraud comes to light

During a routine check, SBI's branch manager at Velachery in the city found abnormalities in the loans recommended by Chitra and on verification noticed irregularities in such loan accounts and reported the matter to higher authorities for further probe.

On investigation, it was noticed that Chitra had hacked the URL of Loan Originating Software.

Though the high court directed the police to register a case against all the 13 borrowers, including the producer and actor of the film, the police did not act and hence, the bank filed a civil suit, the bank submitted in its plea.

In its suit, the bank had sought an injunction to restrain the producers who are all the debtors from releasing the movie.

The PSU lender had also sought a declaration from the court that it is entitled to have a 'first charge' from the sale proceeds of the movie and rights over the film like DVD and satellite rights.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel