From cookbooks to buying gold with loans: what happened at Transstroy

According to the executive director of a public sector bank exposed to loans to Transstroy (India), the company was classified as willful default in 2018, after the fraud investigation report was investigated by the consortium.

According to RBI regulations, an intentional default would have occurred under three conditions. The first is if the borrower has the capacity to repay their lenders but has not done so, the second when the defaulting borrower has not used the funds granted to them for the specific purposes set out in the loan agreement. and third, when the funds provided by the lenders have been diverted from the entity to which they have been extended.

The lenders also initiated insolvency proceedings against the company in October 2018, which ultimately led to the liquidation of Transstroy (India), on the orders of the Amaravati formation of the National Company Law Court in September 2019. According to the data available on the company’s website. , its resolution professional admitted claims worth Rs 8,217 crore from financial creditors and Rs 38 crore from operational creditors.

Separately, the company’s bankers have taken legal action against the developers to recover the personal guarantees they provided, the public sector banker quoted above said.

According to the CBI’s FIR, the agency is also investigating why banks were slow to file a complaint against the company after learning about fraudulent activity in 2018.

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