The beleaguered Tata Finance and its subsidiary, Nishkalp Investment and Trading Company, were able to fudge their operations aided by huge loans from the Bank of India which, in just a one-year period, lent Rs 845 crore through four short-term loans. The Reserve Bank of India has conducted a special scrutiny of the Bank of India operations in October and found that the loans were in violation of banking practices and RBI norms.
The RBI financial inspection of the BoI is on, and the central bank will decide on further action after the final report and the bank's explanation is received. Although BoI was known to have given loans to Nishkalp, the magnitude of the exposure has come as a big surprise.