SBI Caps under CBI scanner for Sandesara Group loans

SBI Caps, one of the top investment banks in the country, is under the radar of Central Bureau of Investigation for its role in arranging loans for oil business of Sandesara Group. CBI's Banking and Securities Fraud Cell may call SBI Caps team for inquiry, sources said.

SBI Caps was a debt syndication agency for loans to Sandesara Group's subsidiary Sterling Oil Resources. Under the loan syndication assignment, SBI Caps prepared an information memorandum and shared a plan with banks on how the loan will be repaid from the earnings of the oil business. As per CBI's FIR filed in October 2017, banks under a consortium led by Andhra Bank had lent Rs 1,375 crore to Sterling Oil Resources.

CBI is mainly looking on two major aspects, on what basis SBI Caps made a lucrative offer to banks and what due diligence was done before preparing the report as the oil well on which banks had sanctioned loan was already mortgaged to Zenith International Bank of Nigeria. SBI Caps, in its report, had projected good cash flows from the oil, and banks relied on it and sanctioned the loan for the same. "It seems the loan was taken from domestic banks to repay the loan of Zenith International Bank," a source said.

In the last week of June, CBI had conducted searches at various bank branches and offices related to loans of Sandesara Group. CBI had also questioned several bank staffers besides scanning the loan documents to understand the basis on which loans were sanctioned for the oil business of Sandesara Group. According to another source aware of the development, "Bank staff in their statement to CBI blamed SBI Caps report for portraying a rosy cash flow picture from the Nigerian oil business of the Sandesara Group."

Enforcement Directorate (ED) is also investigating the Sandesara Group and promoters of the family for siphoning off funds borrowed from domestic banks. As per ED, 249 domestic and 96 overseas companies were used to siphon off the funds received as loans from banks. Andhra Bank was the lead banker and UCO Bank, SBI, Bank of India and Allahabad have significant exposure to the group. The bank exposure to Sterling Biotech is more than Rs 8,100 crore while total exposure to the Sandesara group stands at Rs 15,000 crore.

Recently, ED had frozen the assets of the Sandesara Group in Nigeria including four oil rigs, one oil field, oil installations, ships and aircraft worth Rs 9,700 crore. ED had already attached Rs 4,700 crore of assets of the group in 2018.