Telangana high court questions SBI over Rs 500 crore loan for Rs 200 crore project in Hyderabad

HYDERABAD: Telangana high court, while hearing a petition filed by State Bank of India (SBI) challenging the state govt’s move to resume land allotted to SEM India Fab Private in the Fab City SEZ, Hyderabad, questioned the manner in which the bank sanctioned loans to the company and made strong observations on the lending process.The court asked how SBI could extend a loan of Rs 500 crore to a project reportedly valued at Rs 200 crore and remarked that the bank’s officials had surpassed even the greats in generosity when it came to disbursing loans. It also questioned how the loan was sanctioned against land that the govt had proposed to resume and over which the high court had already granted a stay.

The judge further asked whether the bank had lodged a complaint with the CBI in connection with the matter and cautioned that, if no complaint had been filed, the court might take up the issue suo motu and direct a CBI investigation.Observing that such practices were pushing banks towards bankruptcy, the court asked who was the “great person (mahanubhavudu)” who approved Rs 500 crore for a Rs 200 crore project.Making it clear that no interim relief could be granted at this stage, the court directed the principal secretary of the industries department, vice-chairman and managing director of TGIIC, Shamshabad zonal manager and SEM India to file their counters.

The matter was adjourned to June 25 for further hearing.‘Large-scale fraud’According to SBI, the govt had issued orders seeking to resume land allotted to SEM India in the Fab City SEZ. Following the company’s default on its loan obligations, the bank initiated recovery proceedings and issued a notice to take possession of the land mortgaged to it.When the bank’s counsel argued that the govt was attempting to reclaim the land while recovery proceedings were pending, the judge intervened and asked how a loan of Rs 500 crore had been sanctioned for a project worth only Rs 200 crore.In response, the counsel clarified that the loan amount was not actually Rs 500 crore and that the figure represented the outstanding dues, including accrued interest. The court, however, noted that even according to the bank’s calculations, the dues had mounted to Rs 624 crore.Describing the case as a ‘large-scale fraud taking place in society’, the judge observed that banks were recklessly sanctioning loans using money deposited by the public in good faith.

Companies, the court noted, obtained land from the govt in the name of establishing industries, mortgaged it to secure loans and then fled abroad, leaving banks to bear massive losses.The judge further observed that the govt allotted land with the genuine objective of generating employment, at least for a handful of people, but that companies were defeating that purpose, with banks playing an active role in the process.