How a Ludhiana Firm Fooled Banks for Crores – CBI Court Sends 7 People to Jail

It started like a routine bank loan. It ended with a ₹7.83-crore fraud, forged documents, fake bank statements — and finally, seven people being sent to jail.

A CBI special court in Mohali has sentenced seven accused to three years in prison for a major banking scam involving Ludhiana-based firm M/s Manish Traders. What looked like a normal business loan request turned out to be a carefully crafted conspiracy.

According to the CBI, the accused didn’t just bend the rules — they created an entire world of fake paperwork. From forged audited balance sheets to fabricated SBI bank statements, everything was designed to trick the bank into believing the firm was far bigger and healthier than it really was.

The fraud came to light after Bank of Baroda complained in 2016 that the firm’s partners — Ramesh Kumar Jain, Manish Jain and Kanta Jain — had illegally secured a ₹7.5-crore cash credit limit from its Ludhiana branch. As investigators dug deeper, the truth began to unravel.

The balance sheets submitted to the bank did not match what was submitted to the Income Tax Department. The SBI statement, which supposedly showed strong turnover, was full of fake entries worth ₹9.23 crore. Everything — sales figures, stock details, even capital — had been inflated to cheat the system.

Once the loan was sanctioned, the bank released ₹4.39 crore to clear the firm’s previous dues. But instead of using the money for business, the funds were siphoned off within days, turning the account into an NPA. After years of investigation and trial, the court finally delivered justice.

Those convicted include Manish Jain, his father Ramesh Kumar Jain, and five others from Ludhiana. While the Jains received three years of rigorous imprisonment and a fine of ₹35,000 each, the remaining five were given three years in jail and fined ₹15,000 each.

While pronouncing the verdict, the court said strict punishment is crucial in such cases to protect banks and maintain public trust. A simple loan request turned into a massive fraud — and now, the people behind it are finally facing the consequences.

How can banks prevent such Scams?

Banks can prevent such scams by strengthening their verification and monitoring systems at every stage of the loan process. First, all financial documents — balance sheets, GST returns, ITRs, bank statements and CA certificates — must be verified directly from the issuing sources instead of relying on photocopies or scanned copies given by borrowers.

Banks should use AI-based fraud detection tools to flag unusual patterns such as inflated sales, sudden turnover spikes or mismatched financial ratios. Regular cross-verification with income tax databases, GST portals and credit bureaus can quickly identify discrepancies. Site visits, stock audits and due-diligence checks must be conducted thoroughly, especially for cash-credit and working-capital loans.

Strong maker-checker systems and enforced accountability for branch officials help reduce internal collusion. Real-time monitoring of borrower accounts, transaction patterns and fund flows can detect diversion of funds early. By adopting strict verification, digital fraud-detection tools and stronger internal controls, banks can significantly reduce the chances of such scams.