A major personal loan fraud totalling ₹5.5 crore was discovered at two State Bank of India branches in Dahod, Gujarat, involving forged salary slips, bogus employment documents and collusion with bank officials.
SBI officials initiated internal audits that uncovered 29 loans sanctioned under false pretences at the Yadgar Chowk and Station Road branches. Of the 29 applicants, 17 were real government employees who inflated salary figures on documents, while the others impersonated teachers or bus drivers using entirely fabricated credentials.
Fabricating Salaries to Inflate Loan Eligibility
Indian banks typically approve personal loans up to 20 times an applicant’s monthly income. Fraudsters inflated salaries in fake payslips sent through middlemen, securing larger loans without proper verification. Internal checks revealed red flags: some borrowers were defaulters or had settled prior loans, yet still received fresh credit.
Role of Bank Officials and Middlemen
Two ex-branch managers—Gurmeet Singh Bedi (Yadgar Chowk) and Manish Gavali (Station Road), have been arrested along with three borrowers and two middlemen; another dozen suspects remain under investigation. The suspects allegedly received kickbacks in exchange for approving the fraudulent loans.
Shocking Misuse of Disbursed Funds
Many loans were repurposed fraudulently. One individual claimed ₹19 lakh for construction materials but had no associated business or vendor. Another obtained ₹2 crore for building four floors but constructed only two, allegedly misappropriating the balance.
The Yadgar Chowk branch sanctioned 19 suspect loans between June 2022 and February 2024. Station Road branch processed 10 between September 2021 and June 2024. Loans ranged from basic personal credit requests to housing and business purposes, all based on forged documents.
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Internal Audit as First Line of Defence
SBI’s internal audit, followed by a bank complaint, triggered police FIRs filed at the A Division and B Division police stations in Dahod. The findings revealed systemic flaws in loan approval processes and highlighted the risk posed by unchecked branch-level discretion.
Lessons for Borrowers and Institutions
This case underscores the importance of verification. Borrowers must avoid forged documentation and middlemen. Banks should strengthen compliance and cross-verification protocols and avoid over-reliance on single-branch approvals.