Mumbai — The Central Bureau of Investigation (CBI) has initiated an investigation into a ₹11.37 crore loan fraud involving a Kurla-based partnership firm that specializes in optical fibre laying and maintenance. The firm, which also provides horizontal directional drilling (HDD) and telecom operation services, allegedly diverted sanctioned credit facilities for unauthorized uses, according to a complaint filed by Canara Bank’s Mumbai Circle Office.
CBI sources said the case was registered following a complaint from P. Saravanan, deputy general manager of the bank, who accused the firm’s partners of misappropriating loan funds and falsifying stock statements between 2022 and 2024.
Diversion of Funds and Manipulated Accounts
Investigators allege that the partnership firm diverted portions of the sanctioned ₹11.71 crore credit facility to other entities owned or controlled by its partners. These transfers reportedly lacked business justification and were not related to the firm’s operations in the telecom sector.
According to officials, the partners also manipulated financial records to conceal discrepancies and inflated stock values to maintain the appearance of solvency.
“The accused misused the loan for purposes other than those intended, and in doing so, caused a wrongful loss to the bank,” a CBI officer said.
Canara Bank declared the account a non-performing asset (NPA) in April 2023, and later categorized it as fraudulent, triggering the CBI’s intervention under the Prevention of Corruption Act and relevant sections of the Indian Penal Code for cheating and criminal misconduct.
Possible Collusion with Bank Officials
The investigation also seeks to determine whether public servants within Canara Bank played a role in facilitating the fraud. The CBI has not ruled out collusion or negligence on the part of bank officials responsible for loan disbursal and oversight.
“The possibility of internal complicity cannot be ignored. We are examining whether due diligence was bypassed during loan sanctioning,” said a source familiar with the probe.
If proven, such collusion could extend liability beyond the borrower, encompassing criminal conspiracy under Sections 120B and 420 of the IPC.
A Wider Pattern of Banking Irregularities
The case adds to a growing list of corporate loan frauds flagged by Indian banks in recent years, particularly involving small and medium enterprises that obtained credit under infrastructure and telecom-related projects.
According to officials, the fraudulent activities were uncovered after the bank’s internal audit detected inconsistencies in fund utilization and vendor payments.
The CBI’s Mumbai branch has begun collecting financial statements, transaction records, and digital correspondence from the accused and related entities.
Officials said the agency will also trace the beneficiary accounts that received diverted funds to determine whether they were used for real business or personal enrichment.
Banking Oversight and Regulatory Concerns
The investigation comes amid renewed scrutiny of public-sector banks’ risk assessment protocols, particularly in project-based lending. Banking analysts warn that, despite improved monitoring tools, loan diversion and fund layering remain persistent issues due to weak post-sanction audits and limited accountability.
Experts say the CBI’s findings could influence future guidelines on high-risk credit lending in sectors dependent on capital-heavy contracts, such as telecom infrastructure.
Meanwhile, the accused partners remain under questioning, and the CBI has requested the Forensic Audit Cell to prepare a detailed report on fund flow and asset tracing.
As the case unfolds, it underscores how even specialized technical firms—often beyond public scrutiny—can exploit systemic loopholes to orchestrate multimillion-rupee frauds.
