India’s Biggest Banking Scam: Rs 7926 Crore

The Central Bureau of Investigation booked Hyderabad-based Transstroy (India) Ltd, its promoter and former TDP MP Rayapati Sambasiva Rao for an alleged bank fraud of Rs 7926.01 crore in a consortium, led by Canara Bank.

This is the biggest banking scam in the country so far surpassing the amount misappropriated by diamantaire Nirav Modi, the CBI officials said.

Transstroy (India) Ltd was engaged in execution of major irrigation and infrastructure projects, including the mega Indira Sagar Polavaram Project in Andhra Pradesh.

The CBI, in its FIR, named the company, its CMD  Cherukuri Sridhar and additional directors Rayapati Sambasiva Rao and Akkineni Satish as accused. The former MP was booked in two cases relating to the alleged fraud with the second amounting to Rs 313.79 crore approximately. It is alleged that the private firm based in Hyderabad had availed credit facilities on multiple banking arrangements.

The investigating agency said that it carried out searches on the premises of the company and accused directors in Hyderabad and Guntur, and found incriminating documents. The CBI also alleged that loans were misappropriated by the directors causing a loss of Rs 7926.01 crore to the consortium members.

“It was alleged that the accused had been involved in fabrication of books of accounts, fudging of stock statements, tampering of balance sheets, round tripping of funds etc,” according to CBI spokesperson RK Gaur. 

Transstroy is in trouble with the Enforcement Directorate (ED) registering a Foreign Exchange Management Act (FEMA) case against it in connection with irregularities in foreign exchange transactions.

The ED was probing allegations that Transstroy had transferred funds to Singapore and Russia, in violation of FEMA rules, through a joint venture company, Polavaram Project Transstroy and JSC EC UES, a Russian company. 

At present, Transstroy is under liquidation process following an order by the National Company Law Tribunal (NCLT) in September 2019. 

The second case of fraud to the tune of Rs 313.79 crore has been registered against a private subsidiary company based in Chennai and others including its chairman, director, unidentified public servants and private persons based on a complaint from the State Bank of India.