CBI Court Jails 7 in ₹7.83 Cr Bank of Baroda Fraud

A CBI special court in Mohali has sentenced seven people to three years’ imprisonment in a ₹7.83 crore bank fraud linked to Ludhiana-based trading firm M/s Manish Traders. The court found that the accused, in conspiracy with unidentified officials of Bank of Baroda and State Bank of India, forged financial documents, fabricated bank statements and siphoned off sanctioned funds, causing heavy losses to the bank.

The case dates back to November 4, 2016, when the Central Bureau of Investigation (CBI) registered an FIR on the complaint of Bank of Baroda’s Civil Lines, Ludhiana branch. The bank alleged that the partners of Manish Traders had fraudulently obtained an enhanced cash credit limit by misrepresenting the firm’s financial position and submitting forged documentation.

How the ₹7.83 Crore Loan Fraud Was Engineered

According to the CBI case file and court findings, partners of Manish Traders Ramesh Kumar Jain, Manish Jain and Kanta Jain approached Bank of Baroda for a higher cash credit limit of around ₹7.5 crore. To secure the enhancement, they allegedly presented a carefully constructed package of forged and fabricated documents.

The accused are reported to have:

• Submitted forged audited balance sheets for multiple financial years to show inflated turnover and profitability.
• Filed a fake State Bank of India account statement with exaggerated credit turnover and fabricated transactions running into several crores.
• Produced an inflated turnover report and a forged chartered accountant certificate to project higher net worth and eligibility for a larger loan limit.

During investigation, the CBI discovered that the balance sheets submitted to Bank of Baroda did not match those filed with the Income Tax Department. The SBI account statement handed over during the loan process also contained fictitious entries and an exaggerated credit turnover, masking the firm’s real financial position.

From Sanction to Siphoning: How the Funds Were Diverted

Once the enhanced cash credit limit was sanctioned, Bank of Baroda reportedly released over ₹4.39 crore to take over Manish Traders’ outstanding debt from State Bank of India. Instead of being used strictly for genuine business operations and debt regularisation, the funds were allegedly diverted through layered transactions and withdrawals.

Investigators concluded that the accused intentionally:

• Inflated sales, stock and capital figures to qualify for finance they would not otherwise have obtained.
• Siphoned off a substantial portion of the sanctioned amount soon after disbursal.
• Allowed the account to slip into default, eventually turning into a non-performing asset (NPA) and causing a loss of around ₹7.83 crore to Bank of Baroda.

The court noted that the fraud did not occur in isolation but was facilitated by the misuse of institutional trust placed in financial statements, auditor certificates and inter-bank documentation.

The Verdict: Three Years’ Jail and Fines for Seven Accused

After a multi-year trial, the CBI court in Mohali convicted seven individuals for their roles in the conspiracy linked to Manish Traders. Those convicted include:

• Manish Jain – partner of Manish Traders
• Ramesh Kumar Jain – partner of Manish Traders and father of Manish Jain
• Rachna Jain – resident of Mahavir Jain Colony, Ludhiana
• Bhupinder Singh – resident of Dugri, Ludhiana
• Pritpal Singh – resident of Dugri, Ludhiana
• Sanjeev Kumar Jain – resident of New Tagore Nagar, Ludhiana
• Anita Jain – resident of New Tagore Nagar, Ludhiana

The court awarded three years of rigorous imprisonment to Manish Jain and Ramesh Kumar Jain, along with a fine of ₹35,000 each. The remaining five convicts received three years’ imprisonment and a fine of ₹15,000 each.

While pronouncing the judgment, the court stressed that strict action in bank fraud and loan forgery cases is essential to safeguard public sector banks, protect depositors’ money and preserve confidence in the formal credit system.

Lessons for Banks, NBFCs and Risk Teams

The Mohali Bank of Baroda fraud case underlines how vulnerabilities in credit appraisal, document verification and post-disbursal monitoring can be exploited to engineer significant losses. For banks, NBFCs and other lenders, this judgment offers several key takeaways:

• Deeper financial statement validation – Balance sheets and profit-and-loss accounts submitted for loans should be cross-verified against filings available with the Income Tax Department or MCA databases wherever possible.
• Independent confirmation of bank statements – Statements from other banks (such as SBI in this case) must be independently confirmed and reconciled, especially when they form the basis of turnover and creditworthiness assessments.
• Enhanced due diligence for limit enhancements – Requests for large increases in cash-credit or working-capital limits should trigger additional scrutiny, including transaction analysis and site visits.
• Early-warning indicators for diversion – Sudden fund transfers, circular routing of money and weak repayment behaviour post-disbursal should trigger early-warning reviews and, where necessary, forensic audits.

For boards and senior management, the case is a reminder that loan frauds are not just operational incidents; they carry regulatory, reputational and sometimes criminal implications for institutions and individuals involved.

Shunyatax Global View – Bank Fraud, Loan Forgery & Compliance

At Shunyatax Global, the Mohali Bank of Baroda case is a clear example of how document-driven fraud, weak cross-verification and limited transaction surveillance can combine to create multi-crore losses in what appear to be routine working-capital facilities.

Our financial crime and risk specialists typically focus on three pillars when reviewing exposure to similar risks:

1. Pre-sanction integrity checks
   Independent checks on promoters, auditors, related-party entities and historic compliance records, particularly where large enhancements or fresh multi-bank facilities are sought.
2. Data-driven monitoring of loan books
   Continuous analytics on drawdowns, repayments, stock statements and external data to flag potential diversion, overstated inventory or fictitious sales.
3. Forensic-ready documentation and escalation
   Clear playbooks for when to escalate to forensic review, when to file fraud reports and how to coordinate with investigative agencies such as the CBI.

The Mohali verdict also shows that regulators, courts and investigative agencies are increasingly unwilling to treat large loan frauds as mere “defaults”. Institutions that demonstrate strong, proactive controls are better placed to defend themselves and their stakeholders.

Shunyatax.in Bank Fraud & Compliance Advisory

If your organisation operates in lending, trade finance or working-capital facilities, cases like the Bank of Baroda–Manish Traders fraud are a timely prompt to re-examine your internal controls.

Shunyatax Global helps banks, NBFCs and corporates to:

• Map exposure to loan fraud, forgery and diversion risks across their credit portfolios.
• Design and implement strengthened appraisal, documentation and early-warning frameworks.
• Conduct targeted forensic transaction reviews in high-risk accounts or sectors.
• Align internal processes with regulatory expectations and investigative best practices.

Visit Auditing Services in India to request a confidential review of your bank fraud and loan compliance posture, and to follow the Shunyatax News & Insights column for continuing coverage of financial crime, cyber risk and regulatory developments.