Public sector lender Canara Bank has filed charges of fraud with the Central Bureau of Investigation (CBI) against Hyderabad-based media group Deccan Chronicle Holdings (DCHL) for siphoning off funds loaned to the company, a top official from the bank told FE. The official added that the bank is simultaneously informing the Reserve Bank of India (RBI) and approaching the Debt Recovery Tribunal (DRT) for recovery of dues through the liquidation of the company?s assets.
A group of 24 lenders has an exposure of around R4,300 crore to DCHL. In September last year, Canara Bank had appointed audit firm Deloitte to undertake a forensic audit on DCHL.
The Canara Bank official said, ?The Deloitte investigation could not trace the money lent to the company and hence we feel that the money has been siphoned off. The account is now a loss asset for us.?
ICICI Bank has the largest exposure to DCHL at R490 crore, followed by Axis Bank (R400 crore), Canara Bank (R330 crore), Andhra Bank (R200 crore), Yes Bank (R175 crore), IndusInd Bank (R100 crore), Kotak Mahindra Bank (R100 crore), Indian Overseas Bank (R74 crore) and Corporation Bank (R100 crore), among others.
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Some non-banking lenders include Religare Enterprises with an exposure of R150 crore, Future Capital (R150 crore), Tata Capital (R100 crore), SBI Pension Fund (R50 crore) and IFCI (R27 crore).
A Corporation Bank official said that Canara Bank has filed the charges at its own behest. ?Canara Bank has independently approached the CBI. The forensic audit was also initiated by them,? said the banker.
Some lenders have also begun recovery proceedings against the company, which exited the corporate debt restructuring (CDR) cell.
An Indian Overseas Bank official said that the bank has not pressed criminal charges against DCHL, but has initiated Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act proceedings against the company to recover its dues.
Lenders say that DCHL had entered into multiple banking arrangements without disclosing the extent of its indebtedness to others and used the financial information ended March 2011 to take a total debt of over R4,300 crore.
It was only after DCHL defaulted on its short-term non-convertible debentures on June 26, 2012, that other banks that had advanced loans to DCHL started worrying about their exposure to the company.
Subsequently, a group of lenders wrote to the then corporate affairs minister Veerappa Moily, alleging that in a period of 15 months the promoters have reduced the company from a position of net cash of Rs 390 crore in March 2011 to a net debt of over Rs 4,300 crore.
Following this, the finance ministry had appointed a two-member panel to conduct a probe, while Canara Bank appointed Deloitte to carry out the investigation.
DCHL had last year also sought a debt recast through the CDR cell. However, it was withdrawn from the cell in October last year as the lenders suspected financial irregularities in the company.
