Forensic auditing to check loan frauds

Banks rely on pvt agencies for conducting audit to identify frauds committed by companies

Hyderabad: Forensic auditing is one measure by banks that enables them expose frauds committed by several companies after availing loans worth crores of rupees. This step is also facilitating banks to nail errant companies by lodging a complaint with the Central Bureau of Investigation (CBI).

After a break perhaps due to the lockdown, several nationalised banks have now started approaching the CBI requesting detailed probes into frauds committed by companies after securing loans. Apart from regular internal audits, banks are also relying on private agencies for conducting forensic auditing to identify frauds committed by companies. Diversion of bank funds has also come to light in several instances during forensic auditing in several banks, officials said.

Last week, the CBI booked a case against three city-based infra companies along with three other persons for allegedly siphoning and diverting Rs 107.98 crore. Based on a complaint lodged by Punjab National Bank (PNB), the CBI booked the case under Section 120B (Criminal Conspiracy) read with 420 (cheating) of Indian Penal Code (IPC) along with provisions of Prevention of Corruption (PC) Act.

The forensic audit conducted by the bank found unexplained diversion of bank funds. The funds extended for the company’s project were routed back to a group of entity accounts, the CBI FIR added. In another case, the CBI booked a case against a company based in Cherlapally and two others on charges of defrauding a nationalised bank of Rs 95.08 crore. The fraud came to light through forensic auditing.

Telangana and Andhra Pradesh Bank Employees Federation secretary MS Kumar said loan frauds in banks were taking place because of lack of proper monitoring mechanism. “It’s appreciable that banks are now seeking the help of law enforcement agencies to nail errant companies for cheating after availing loans,” he added.

Sources said several companies were found to be committing loan frauds with the connivance of a few bank employees. The CBI is also probing the role of employees after receiving a complaint from the bank concerned.

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