HYDERABAD: IN a flagrant violation of its Corporate Debit Restructuring (CDR) agreement with banks, a city-based construction company, namely Iragavarapu Venkata Reddy Constructions Private Limited (IVRCL), is alleged to have swindled more than 15 banks of Rs 7,000 crore. The firm withdrew the said amount from a consortium of banks, which included SBI, IDBI Bank, Canara Bank, Andhra Bank, and others.
Days ago, the CBI had registered cases against the management of IVRCL for defrauding the consortium of banks. This may be one of the major banking frauds committed by a construction company in the recent past.Reportedly, SBI’s Secunderabad branch had sanctioned the major portion of the loan to the company. The bank’s CAG had submitted an internal forensic audit report to the CBI, stating that the company had manipulated account books and records before diverting the funds to other accounts, causing loss to the banks.
“As per its financial statement, IVRCL has no income. Details pertaining to its sources of funds, which was accounted for as promoter contribution, was not available for forensic audit. The promoter contribution was brought in at questionable terms (interest and assets mortgage), resulting in a violation of the CDR agreement. Further, IVRCL misused non-fund based facilities by making payments to Hindustan Dorr Oliver Limited (HDO), Palladium Infrastructure Limited and its subsidiaries, such as Associates Industrial Goods Suppliers, and Kalyug Developers Limited through Letter of Credit (LC), though there were no procurement transactions with inadequate supporting documentation,” the audit report said.
Based on the findings, the bank decided to declare the account as fraudulent. Fraud Identification Committee, in its meeting held on January 29, 2020, found that the company violated the CDR agreement, and misused non-fund based facilities. The CBI has booked IVRCL managing director E Sudhir Reddy, and joint managing director R Balarami Reddy.
