SBI Alleges ₹4.29 Crore Fraud After Scrap Found in Place of Pharma Machinery
A routine inspection at a pharmaceutical manufacturing unit near Hyderabad has allegedly exposed a complex loan fraud scheme after bank officials discovered scrap materials hidden inside packaging intended for industrial machinery. The State Bank of India (SBI) has filed a formal complaint accusing a local pharma firm and its directors of defrauding the institution of ₹4.29 crore by diverting funds earmarked for equipment.
Background and Context
The allegations center on Bioeq Care, a company that approached SBI’s SME branch in Yellareddyguda in August 2023 seeking financial assistance to establish a manufacturing unit for active pharmaceutical ingredients (API). Following standard due diligence, including collateral inspections and legal opinions, the bank’s Regional Credit Committee sanctioned a cash credit limit of ₹1.5 crore and a term loan of ₹5.15 crore. Despite the approval and disbursement of funds, commercial operations never commenced, leading the bank to classify the account as a non-performing asset (NPA) in May 2025.
Key Figures and Entities
The complaint, filed by Konapuli Hareesh, Chief Manager of SBI, names Rohini Shiva Chandra Sekhar and R. Mounika—the Managing Director and Director of Bioeq Care respectively—as primary accused. It also implicates guarantors Anugula Bhupal Reddy and Anugula Mahipal Reddy. According to the filing, these individuals are accused of conspiring to cheat the bank by falsifying the procurement of machinery and misappropriating the loan proceeds. The company had submitted land in the Uskabavi hamlet of Ameenpur district as collateral, transferred via a Gift Deed, to secure the credit facilities.
Legal and Financial Mechanisms
The financial structure relied on the hypothecation of plant and machinery, alongside the land collateral. While SBI disbursed approximately ₹4.62 crore to vendors for the purchase of machinery, a subsequent valuation on August 25, 2025, revealed a stark discrepancy. Instead of the expected autoclave machines and a Lyophilizer (freeze dryer), bank officials and valuers reported finding used cardboard, sofa cushions, bricks, and second-hand equipment inside the machinery packages. This discovery suggests a systemic diversion of loan funds. Following the default, the bank utilized the SARFAESI Act, issuing demand notices under Section 13(2) and possession notices under Section 13(4) to recover the outstanding dues.
International Implications and Policy Response
This case highlights ongoing vulnerabilities in the banking sector regarding asset verification, particularly in specialized industries where equipment is difficult to value without technical expertise. It underscores the reliance banks place on borrower-provided documentation and the challenges of monitoring the end-use utilization of funds in real-time. Incidents of such fraud contribute to the rising volume of NPAs in the Indian banking system, prompting stricter regulatory scrutiny and calls for enhanced due diligence mechanisms for SME lending.
Sources
This report draws on the complaint filed by the State Bank of India as reported by Hyderabad Mail, along with public documentation regarding the SARFAESI Act and RBI guidelines on non-performing assets.
