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1,238 Bank of Baroda branches issued fake gold loans to meet targets

7 Feb 2024

BoB branches with Gold Loan Shoppes issued disbursed the fake loans. Some friendly customers were in on it.

In another case of bank fraud, some Bank of Baroda employees in the South India carried on the scheme in an alliance with friendly customers. The branches with Gold Loan Shoppes would sanction the fake loan without collateral and disburse the money to customer's account.

A lien (a block on a sum of money) was created on it so the customer couldn't use the money. After some time, the money would be returned to the bank to show a regular loan repayment.

The branch would pay processing fees from its internal expense account. Interest payments were avoided by back-dating the loan repayments. So the system would show that the loans were repaid the same day as they were disbursed, which reversed any interest charges.

An offside audit identified anomalies in some gold loan accounts closed within three-month periods between April and September.

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