India's Central Bureau of Investigation (CBI) has arrested a director of a New Delhi based private company and another person in a case relating to an alleged US$3.45 million fraud involving Canara Bank.

The fraud employed 23 fraudulent letters of credit (L/Cs) secured on the back of credit obtained with false documents.

L/Cs diverted

The unnamed steel firm allegedly opened the fraudulent L/Cs with Canara Bank in 2013 in favour of eight beneficiaries.

Proceeds from the L/C however were diverted to the accounts of companies affiliated with the steel company.

Cash diverted

The accused also diverted cash obtained from Canara Bank under other agreements between the bank and the steel company.

Canara Bank incurred an alleged loss of US$3.45 million according to a CBI statement.

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