Gujarat CID Crime has initiated an investigation into an alleged ₹5 crore loan fraud involving an Ahmedabad-based partnership firm and its partners, following a complaint filed by a senior banking professional. The complaint alleges that the firm secured a substantial cash credit facility by overstating its financial position, inflating receivables, misrepresenting stock levels and later diverting borrowed funds for personal purposes.
According to the complaint, the firm obtained a ₹5 crore cash credit facility in December 2021 by mortgaging two plots located near Kalol in Gujarat’s Gandhinagar district. While the loan account initially appeared to function normally, repayment irregularities reportedly surfaced soon afterward. Persistent defaults eventually led the lending institution to classify the account as a Non-Performing Asset (NPA), triggering recovery proceedings.
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Forensic Audit Flags Stock Inflation and Fake Receivables
The matter came under closer scrutiny after an internal vigilance inquiry conducted by the bank reportedly identified suspicious financial transactions and inconsistencies in the firm’s records. Following these findings, a detailed examination of the loan account was undertaken, including a forensic audit covering the period from November 2021 to August 2024.
The forensic audit allegedly uncovered several serious financial irregularities. According to the complaint, the firm exaggerated the value of its receivables and presented inflated figures relating to coal stock in order to portray a stronger financial position. Investigators were also informed that the company made unsupported claims regarding goods allegedly lying at ports, despite insufficient documentary evidence to substantiate those assertions.
Alleged Diversion of Funds for Personal Use
In addition, certain sales and purchase transactions recorded by the firm have reportedly come under scrutiny. Investigators suspect that some of these transactions may have been structured to artificially improve the company’s financial profile and strengthen its eligibility for enhanced credit facilities.
Authorities examining the case have been told that the allegedly misleading financial disclosures played a significant role in obtaining and maintaining banking support. The complaint argues that had the lender been aware of the firm’s actual financial condition, the extent of the credit facility granted may have been substantially different.
Another major aspect of the investigation concerns the alleged diversion of borrowed funds. According to the complaint, significant amounts were transferred for purposes unrelated to the company’s business operations. Investigators have been informed that transactions worth nearly ₹10 crore were allegedly routed toward personal expenditures rather than legitimate commercial activities.
Among the expenditures under scrutiny are payments allegedly linked to the purchase of a high-value residential property in Ahmedabad. The complaint further claims that substantial sums were transferred to bank accounts belonging to the firm’s partners and their family members. Investigators are now examining the nature of these transactions and whether they were connected to the misuse of loan funds.
Banking Exposure and Ongoing Recovery Action
The complaint also alleges that the firm had borrowed money from multiple financial institutions and accumulated liabilities amounting to several crores of rupees. Some recovery proceedings related to outstanding dues are reportedly already pending before a Debt Recovery Tribunal (DRT).
CID Crime officials have begun examining allegations of cheating, criminal breach of trust, fund diversion and financial fraud. Investigators are expected to verify the findings of the forensic audit, review banking records and trace the movement of funds to determine whether the allegations are supported by documentary and financial evidence.
Expert View on Banking Fraud Detection
Financial crime experts note that forensic audits often play a crucial role in complex banking fraud investigations because they help establish whether financial statements were manipulated to secure loans and whether borrowed funds were ultimately used for their stated business purposes.
The investigation remains at an early stage, and authorities are continuing to analyse loan documents, property records and financial transactions linked to the firm and its partners. Officials believe that a detailed review of the evidence will help determine whether the banking system was deliberately misled and whether the accused obtained financial facilities through fraudulent representations. As the probe progresses, investigators are expected to focus on tracing the complete flow of funds and identifying any additional individuals who may have benefited from the alleged diversion of money.
