₹450 crore TBVFL loan scam: 5 financial red flags borrowers must watch | Mint

In one of the biggest bank loan fraud investigations, the Enforcement Directorate (ED) carried out raids at 15 locations across Mumbai, Pune, Goa and Chennai in connection with an alleged ₹450 crore bank loan fraud. The case primarily involved Talwalkars Better Value Fitness Ltd (TBVFL), one of the nation’s largest chains of gyms and health clubs, reported Indian Express.

The ED’s probe stems from several FIR’s registered by the Mumbai Economic Offences Wing (EOW) along with other police authorities. The promoters and directors of TBVFL are accused of siphoning off funds taken as loans and non convertible debentures (NCDs) from Laxmi Vilas Bank and Axis Bank.

Furthermore, during the conduction of raids, the agency recovered incriminating documents, digital devices, related data, unaccounted cash of ₹8 lakhs and property valued at ₹200 crore.

What the ED found

As per the officials, TBVFL diverted sanctioned loan funds to shell entities and companies under the guise of vendor payments. These funds were then routed back to related entities owned by the promoters themselves.

Further, the company defaulted on paying back Axis Bank ₹206.35 crore and Laxmi Vilas Bank ₹180 crore. Inflated payments on royalties, fraudulent share premiums and overseas investments were also uncovered during the investigation.

Keeping the above factors in mind, with the rapidly evolving technology it becomes equally important for borrowers to protect themselves from bank loan frauds by inculcating healthy financial practices and taking informed borrowing decisions. Here are five ways by which you can protect yourself from bank loan frauds:

How to protect yourself from bank loan frauds

Even though this particular case involves a corporate entity, it still serves as a wake up call for individuals and small businesses alike. Here’s how you can safeguard your financial health:

1. Verify the lender’s credentials

Before applying for any particular loan, personal or business, do ensure that the lending institution is registered with the Reserve Bank of India (RBI). Avoid dealing with relatively lesser known applications or NBFCs not listed on RBI’s official portal. 

2. Scrutinise the loan agreement

Carefully go through the fine print of the personal loan offered to you, verify the interest rates, prepayment charge clauses, associated charges and repayment schedules. Fraudulent lenders often insert hidden and complicated terms to exploit unsuspecting borrowers.

3. Track loan disbursals and usage

If you have taken a personal loan for a specific purpose i.e., education, home, business along with other similar reasons. Then do ensure that the funds are disbursed to relevant parties and not parked anywhere else. Focus on maintaining transaction receipts and bank statements, loan documentation as evidence.

4. Monitor your credit report

Check your credit report and credit score on a regular basis. You can refer to bureaus such as CIBIL, CRIF High Mark, Experian or Equifax to monitor your credit report. The report will alert you if a personal loan has been taken in your name without your consent or if a financial institution has incorrectly reported defaults.

5. Report suspicious activity immediately

If you feel or suspect a financial fraud, whether it is forged documents, unrecognised fund disbursals, or inflated loan amounts, you should report such activities on immediate basis to your financial institution, the local police and the RBI Ombudsman.

Hence, the alleged ₹450 crore TBVFL scam showcases how systemic misuse of loans can go undetected for years if regulatory gaps are not monitored. Whether you are a business owner or an individual borrower protecting your credit score, credit identity and understanding how lenders operate are key to avoiding financial frauds. Stay vigilant, verify every step and never share sensitive financial information and data without cross checking the source.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. For any credit-related grievances, consult a professional or report to the RBI Ombudsman.