Frost International Scam – Burning Issues

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CONTEXT

The Central Bureau of Investigation has booked Frost International Limited (FIL) and 14 others.
For allegedly cheating a Bank of India- led consortium of ₹3,592.48 crore.

Credit Facility is an agreement with bank that enables a person or organization
to be taken credit or borrow money when it is needed.

BOI had given the credit facility of Rs 380.65 crore to Frost International.
This was increased to Rs 4,061 crore with formation of consortium of 14 banks in 2011.
Other banks in the consortium include-
Andhra Bank, United Bank of India, Allahabad Bank, Oriental Bank of Commerce, Punjab National Bank, UCO Bank, Vijaya Bank, Canara Bank, Bank of Baroda, Central Bank of India, Union Bank of India and Syndicate Bank.
In the loans taken from the consortium,
BOI has the highest exposure of Rs 756 crore which the company has not repaid.
In addition to the credit facilities from 14 banks, Indian Overseas Bank (IOB) also extended credit exposure of Rs 498.51 crore outside consortium arrangement.

A stress in the loan accounts was noticed from January 2018,
When the letters of credit started devolving with the member banks, as export proceeds were not realised.
The accounts soon turned non-performing assets, and were declared a fraud last year.

It found instances of no actual export of goods.
There was a mismatch in the ship movement data with those from the loading and discharge ports.
A mismatch was also observed in 18 merchant trade transactions.
When the lead bank wrote to 10 parties owing money to FIL, it did not receive any response.
The banks allege that the company and its promoters showed trade without having genuine business transactions and defaulted on repayments.
The funds were allegedly