ED Raids Punjab Basmati Rice Limited in ₹350.84 Crore Bank Fraud Case

Jalandhar-New Delhi : The Directorate of Enforcement (ED), Jalandhar Zonal Office, has intensified its investigation into an alleged bank fraud involving M/s Punjab Basmati Rice Limited (PBRL) and its promoters. As part of the ongoing probe, ED officials conducted coordinated search operations on June 5, 2026, at six business and residential locations linked to the company, its directors, promoters, including Kulwinder Singh Makhni, and other associated individuals.

The action stems from allegations that Punjab Basmati Rice Limited and its management orchestrated a large-scale financial fraud amounting to ₹350.84 crore, causing significant losses to a consortium of six public sector banks led by Canara Bank.

Investigation Originated from CBI Case

The Enforcement Directorate initiated its money laundering investigation based on an FIR registered by the Central Bureau of Investigation (CBI), New Delhi. The CBI case was filed against Punjab Basmati Rice Limited and its directors under various provisions of the Indian Penal Code (IPC), 1860, and the Prevention of Corruption Act, 1988.

According to the allegations, the company’s promoters and directors obtained substantial credit facilities from a consortium of banks and subsequently diverted funds, resulting in wrongful losses to lending institutions and corresponding gains to the accused individuals.

Alleged Diversion of Bank Funds

Investigators have alleged that the company manipulated financial records and created fictitious business transactions to conceal the diversion of borrowed funds.

During the course of investigation, it was reportedly found that the company showed sales of stock to several non-existent or fictitious entities. These entities were reflected as debtors in company records, thereby creating an artificial picture of business activity.

Officials further suspect that multiple shell companies were used to facilitate bogus sales transactions. The proceeds generated through these alleged transactions were reportedly withdrawn in cash, making it difficult to trace the final beneficiaries of the funds.

The ED believes that such financial arrangements were designed to siphon off money obtained from public sector banks while disguising the movement of funds through layers of transactions.

Extensive Search Operations Conducted

As part of the money laundering probe under the Prevention of Money Laundering Act (PMLA), 2002, ED teams conducted simultaneous searches across six locations connected with the company and its promoters.

During the raids, officials recovered and seized several documents and electronic devices that are believed to contain crucial evidence regarding the movement of funds and the financial dealings of the accused entities.

Investigators are currently examining digital records, financial statements, communication devices, and transaction-related documents recovered during the operation.

Cash and Foreign Currency Recovered

The search operations also led to the recovery of ₹8.50 lakh in cash and USD 8,600 in foreign currency from the premises searched.

The seized cash, foreign exchange, and electronic evidence have been taken into custody under the provisions of the Prevention of Money Laundering Act and will be subjected to detailed forensic and financial analysis.

Officials believe the recovered material may help establish the flow of funds and identify additional individuals or entities that may have played a role in the alleged fraud.

Focus on Shell Companies and Financial Trail

The Enforcement Directorate is now focusing on tracing the complete money trail linked to the alleged scam. Investigators are examining whether the shell entities identified during the investigation were created solely to facilitate fund diversion and laundering activities.

Financial records are being scrutinized to determine the ultimate beneficiaries of the diverted funds and to identify assets acquired through the alleged proceeds of crime.

The agency is also examining transactions involving associated firms, related parties, and bank accounts that may have been used to channel funds outside the formal financial system.

Public Sector Banks Suffered Major Losses

The alleged fraud has had a significant impact on the consortium of banks involved. According to investigators, the fraudulent activities resulted in losses of over ₹350 crore to public sector banks, raising concerns about corporate governance, loan monitoring, and banking compliance mechanisms.

The case highlights the challenges faced by financial institutions in detecting complex frauds involving shell entities, fabricated transactions, and diversion of borrowed funds.

Further Investigation Underway

The Enforcement Directorate has stated that the investigation remains active and several aspects of the case are still being examined. Officials are analyzing the seized records and electronic data to uncover the full extent of the alleged conspiracy.

Further action, including attachment of properties and identification of additional accused persons, may follow based on the findings of the ongoing investigation.

Authorities have reiterated that the probe aims to establish accountability, recover proceeds of crime, and ensure that those responsible for financial fraud and money laundering are brought to justice under the law.