The Economic Offences Wing (EOW) of the Mumbai police has registered a case of cheating and forgery against the directors of two private companies for allegedly duping HDFC Bank to the tune of Rs 21.82 crore.
The accused company availed bill discounting facilities from the bank on the basis of bogus bills/invoices and defrauded it. The police have booked Satnam Singh Maini and Harangad Singh Maini of Agile Security Force & Systems Pvt. Ltd. and Whiskers Infracare Pvt. Ltd.
What is Bill discounting?
Bill discounting is a type of lending in which the bank takes the bill drawn by the borrower on his customer and pays him immediately, deducting some amount as a discount/commission. The Bank then presents the Bill to the borrower’s customer on the due date of the Bill and collects the total amount.
How Bill discounting fraud is done?
Bill discounting fraud refers to a type of fraud in which a fraudster presents himself/herself as a genuine, profitable customer before a bank by using a company. After that the company will regularly and repeatedly use the bank to get payment from one or more of its customers and thereby give the bank the picture of a desired customer.
Since the customers in question are part of the fraud these payments are always made. They will also actively pay any and all bills raised by the bank. Eventually, when the bank is happy with the company, the company will request the bank to settle its balance with the company before billing the customer.
Even after this, the fraudulent company will carry on business along with its fraudulent customers and the unwitting bank. When the outstanding balance between the bank and the company is sufficiently large, the company will take away the payment from the bank. Subsequently the company and its customers will disappear leaving no-one to pay the bills issued by the bank.