The 2015 decision of the State Bank of India, SBI led consortium to lend a loan of around Rs 1,300 crore to Sterling Global Oil Resources Ltd, a foreign subsidiary of the defaulting Sterling group has come under the cloud. The consortium extended guarantees in the form of Standby Letters of Credit (SBLCs) of around Rs 1,300 crore. The total debt of the Sterling Group stands at about Rs 15,000 crore.
In 2012, State Bank of Madras, one of the subsidiaries of SBI had filed a criminal complaint against Sterling Biotech Ltd for loan default of Rs 80.90 crores. In 2014, it was the first bank to declare Sterling Biotech and its owners Nitin Sandesara and Chetan Sandesara as wilful defaulters as per guidelines of the Reserve Bank of India (RBI).
According to the RBI norms, no new credit facilities can be given to promoters and companies who are on the list of wilful defaulters. It has also been found that not only the loan was granted despite the criminal complaint and the company’s status as a wilful defaulter being in the public domain but also that the RBI’s Department of Banking Supervision did not flag or stop the new credit facility extended by the consortium to the company in 2015.
The CBI and the Enforcement Directorate have booked Sterling Biotech, its directors Sandesara brothers, Dipti Chetan Sandesara, Rajbhushan Omprakash Dixit, and a few others in connection with the alleged Rs 8,100 crore bank fraud case.
The allegation also relates to the laundering of money. Investigation agencies claim that the loan money was diverted for purposes other than it was sanctioned for. The network involves a number of domestic and offshore shell companies. The group is also alleged to be engaged in round tripping of SBLC funds to the tune of Rs 4,500 crore by violating conditions laid down by the RBI while sanctioning the loan. The ED has moved court to declare Nitin Sandesara, Chetan Sandesara and Dipti Sandesara fugitive economic offenders.