₹6,200-Crore Bank Scam Exposed: Web of Shell Firms and Fictional Transactions
Investigations have uncovered a sophisticated financial conspiracy worth over ₹6,200 crore, orchestrated through a network of approximately 60 shell companies with fictitious turnover in India's iron and steel sector. According to the Enforcement Directorate (ED), Kolkata-based businessman Sanjay Sureka allegedly constructed a paper empire that secured massive loans from a consortium of government-owned banks through forged documents and circular transactions between ghost entities.
Background and Context
The case centres on Concast Steel & Power Ltd (CSPL), once projected as a major iron and steel group with plants across West Bengal, Odisha, and Andhra Pradesh. After Sureka acquired the company in 2008, it allegedly began generating fake sales, purchases, and transport documents to project rapid growth and strong sales volumes—none of which existed in reality. The deception highlights persistent vulnerabilities in India's banking sector despite repeated regulatory reforms following previous high-profile frauds.
Key Figures and Entities
The ED investigation names Sanjay Sureka as the mastermind behind the scheme, allegedly appointing junior staff—including drivers, housekeeping personnel, and office boys—as directors of shell companies to create layers of anonymity. More troublingly, investigators allege that S.K. Goel, who served as Chairman and Managing Director of UCO Bank between 2007 and 2010, acted as an active accomplice. According to court filings, Goel allegedly facilitated loans in exchange for properties purchased in the names of shell companies, with ownership later transferred to his family members.
Legal and Financial Mechanisms
The fraud relied on elaborate circular transactions among shell entities, creating an artificial web of sales and purchases to justify continuous bank lending. According to the ED, over 99% of transactions were mere book adjustments with no real cash flow or movement of goods. Forged invoices, manipulated ledger entries, and fake transport receipts allegedly showed trucks ferrying iron and steel between factories—though investigators found no actual deliveries occurred. By 2017, CSPL was effectively selling goods to itself, booking revenues only on paper while nearly 90% of payments bypassed the banking system entirely.
International Implications and Policy Response
The scale of the fraud—against loans exceeding ₹6,200 crore, the company's liquidation value stood at barely ₹600 crore—raises serious questions about banking governance and oversight in India's financial sector. The case demonstrates how insider collusion and weak controls can place vast amounts of public money at risk, particularly in state-owned banking institutions. Following the arrests, the Reserve Bank of India has reportedly tightened monitoring mechanisms for large corporate loans, though regulatory gaps in detecting sophisticated shell company networks remain.
Sources
This report draws on official statements from the Enforcement Directorate, court documents related to the ongoing investigation, filings from India's Ministry of Corporate Affairs, and independent news reporting published between 2023 and 2024. Information about the arrests and property attachments was confirmed through Central Bureau of Investigation records and public banking regulatory filings.
