3 cos linked to bank fraud, bad debts face SFIO probe

New Delhi: The government has ordered an enquiry by the Serious Frauds Investigation Office (SFIO) against Ruchi Soya, Sterling Biotech and the Chennai-based jewellery chain Kanishk Gold as part of its latest crackdown against companies that have impacted banks.

The ministry of corporate affairs referred the cases to SFIO recently, sources said. Ruchi Soya is facing insolvency proceedings, with Ramdev’s Patanjali seen to be the frontrunner to take over the ailing company with a bid of Rs 4,000-4,500 crore. The company, which makes Nutrela soya products among others, faces claims of around Rs 12,000 crore Sterling Biotech and Kanishk Gold have been named by the Central Bureau of Investigation (CBI) in two cases. In January, State Bank of India (SBI) had sought CBI’s help to investigate Kanishk Gold for an alleged loan fraud of around Rs 825 crore.

In case of Sterling Biotech, which is part of a Gujarat-based group, an Andhra Bank official has already been arrested by the Enforcement Directorate (ED) and the lender has also sought initiation of insolvency proceedings against the company. Sources said that apart from allegations of financial bungling, involvement of political entities was also being looked into by other government agencies. Sterling Biotech owes around Rs 4,000 crore to lenders, while banks have loans to the tune of Rs 5,000 crore to the group.


In recent weeks, several loan default and insolvency cases have come under the scanner of investigative agencies, especially after the finance ministry asked lenders to check all large cases and accounts which turned into non-performing assets (NPAs) for fraud.

A reference to the SFIO follows preliminary scrutiny by the government as it receives several complaints. Among bank fraud cases, those related to entities owned by Nirav Modi and Mehul Choksi have been referred to the SFIO as part of a multi-agency probe. Typically, investigations by the agency, set up over a decade ago, take time as it often runs against a wall when trying to get information from other countries.

Among the over 300 cases referred to the SFIO, Vijay Mallya’s Kingfisher Airlines is one of the most high profile loan cases where it has moved courts to act against the company. Recently, Fortis and Religare were added to the list of cases referred to it.