CBI says SEL Textiles diverted its way through a 10-bank Rs 1,530 crore hole

In August 2020, the CBI booked Ludhiana-based SEL Textiles Ltd (SELT) and its directors — Ram Sharan Saluja, Neeraj Saluja and Dhiraj Saluja, the last managing the overseas business from abroad — for allegedly cheating a consortium of 10 public sector banks of Rs 1,530 crore. Acting on a complaint from Central Bank of India, the FIR alleged a criminal conspiracy to defraud the banks and divert loan funds for misappropriation between 2009 and 2013.

The paper trail was damning once anyone looked. Central Bank declared the account an NPA in 2014; other consortium banks followed. A special investigative audit during debt restructuring found irregularities — and noted the company withheld critical information, leaving most details unverifiable. A forensic audit then 'revealed large scale diversion of loan funds': short-term funds diverted to long-term uses, money sunk into unproductive assets, and a new chain of intermediaries for purchases beyond the company's capacity.

The most creative alleged manoeuvre concerned the parent: SEL Manufacturing Co Ltd was shown as contributing Rs 380 crore to SELT, but the audit found 'no actual contribution' — the sum was allegedly round-tripped through sales and purchase entries and third-party account adjustments, plus related-company trading and misuse of funds for unsanctioned purposes. 'Opaque and recalcitrant approach towards lenders and inadequate disclosures during the forensic audit give credence to wilful default impressions,' the audit concluded. The bank asked the CBI to impound the directors' passports.

Alleged loss of Rs 1,530 crore to a 10-bank consortium; CBI FIR against the company and three Saluja family directors.

Loan funds were allegedly diverted between 2009 and 2013 while the consortium kept lending, with the fraud surfacing only after the 2014 NPA.

Short-term working-capital money was allegedly moved into long-term uses and unproductive assets, breaking the repayment logic.

The parent's Rs 380 crore 'contribution' was allegedly round-tripped through fictitious sales, purchases and third-party adjustments.

The company withheld critical information from auditors and stonewalled lenders — conduct the audit itself called opaque and recalcitrant.

Lenders find diversion only after the money is gone: audit rights, disclosure demands and related-party visibility have to be exercised during the loan, not during the restructuring.

As of the August 17, 2020 FIR, the CBI had named the company and the three Saluja directors, with the Central Bank of India pressing for passport impounding; the alleged loss to the 10-bank consortium stood at Rs 1,530 crore and the case was beginning.