India's Central Bureau of Investigation (CBI) has arrested the promoter of a telecom company in connection with a US$19 million loan scam case.

Sunil Kakkad, the promoter of Click Telecom, allegedly used letters of credit (L/Cs) to cheat a consortium of State Bank of India (SBI), Canara Bank and Vijaya Bank.

Discounted L/Cs

The CBI alleges that Kakkad opened L/Cs in favour of associate companies.

These L/Cs were subsequently discounted and the funds siphoned off.

Under investigation

Kakkad also features in six other similar cases currently under investigation according to the CBI.

It says that the total cost of the seven alleged frauds for which Kakkad now faces charges or is under investigation amounts to US$135 million.

Banks involved in the six frauds under investigation include Corporation Bank, SBI, State Bank of Bikaner and Jaipur, Allahabad Bank, Bank of Baroda and Vijaya Bank.

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