The Central Bureau of Investigation (CBI) has registered a criminal case against Future Retail Ltd., the company behind the once-ubiquitous Big Bazaar chain, and its promoters for an alleged bank fraud of Rs 904.32 crore. Meanwhile, the group owes banks (including foreign banks) more than Rs 19,500 crore, investigators say.
The FIR, filed on November 4 on a complaint by State Bank of India’s Stressed Assets Management Branch-III, Mumbai, names Kishore Biyani and Rakesh Biyani, along with unknown public servants and private individuals. The CBI has charged them with criminal conspiracy to cheat and offences under the Prevention of Corruption Act.
The accused allegedly systematically obtained working capital limits, term loans, and letters of credit from SBI and a consortium of nine banks and diverted them from their intended purpose of running the retail business. Future Retail operated hypermarkets and supermarkets under the Big Bazaar, Fashion@Big Bazaar, and Foodhall brands and did business in FMCG and fashion.
The company had availed facilities from the SBI Commercial Branch at Fort, Mumbai. The complaint states that the funds were siphoned off through associate and linked companies, and the bank suffered a wrongful loss of Rs 904.32 crore.
Within two days of registering the case, CBI teams searched various properties of the promoters and directors in Mumbai today.
They have seized several incriminating documents, which are being examined to establish the full chain of diversion and to identify all those involved.
The agency said the probe will continue until it determines the end use of the loan funds and establishes the roles of both private individuals and any public servant(s). No arrests have yet been made.
The case puts fresh focus on a retail house that was once the dominant player in the organised retail space through its Big Bazaar stores. It expanded rapidly and then imploded under a mountain of debt.
The CBI has found that the credit facilities meant for the stores went elsewhere, leaving the banks holding the bag. The investigation now examines whether the same pattern of diversion occurred across the nine-bank consortium and whether related-party transactions were used to disguise fund movements.
By recovering documents from the promoters’ premises on the same day the searches commenced, the agency has clearly indicated that the case will move rapidly from the complaint stage to individual accountability. What happens next will be entirely dependent on the evidence currently in their possession and the statements still to be taken.
Registering the case and conducting immediate searches are significant steps in scrutinising how large amounts of retail credit were used (and ultimately lost, according to the bank).