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At UCO Bank in Lucknow, gold turns into copper!

Sharat Pradhan in Lucknow

In a unique case, a Lucknow branch of the United Commercial Bank has accused a loanee of playing fraud on the bank by depositing copper instead of 13.73 kg of gold as security towards the loan of Rs 20 million.

On the contrary, the loanee has filed a complaint with the police, charging the bank for duping him by replacing his gold for gold-plated copper.

While the bank had filed a case against the loanee Sunil Rastogi, the latter too got the court's intervention to get a counter-case registered against the bank.

The Lucknow police appear to be in a fix over the matter and finds it difficult which side to believe. Initially, it declined to rely on the version of the loanee jeweller, M/s Lucknow Chainlink, a partnership firm owned by Sunil Rastogi and others .

However, finally Rastogis and his other family members, who were also his partners, moved the local court, which directed the police to register a case against the bank.

According to the complaint, the jeweller firm that is engaged in large-scale export of gold chains had applied for a loan of Rs 20 million in April 2000, from the Wazirganj branch of the bank to meet a big order from Hong Kong.

The Rastogi firm enjoyed good business relations with the bank, which had already allowed them a credit limit of Rs 10 million.

So things went smooth when the jeweller readily offered to fulfil the bank's demand for security in terms of gold against the fresh loan.

On April 27, 2000 the loan of Rs 20 million was sanctioned after due deposit of 13.73 kg of gold with the bank as 'security'.

Says Rastogi in his complaint: "The gold was deposited after the necessary inspection and valuation by top officials of the bank, including deputy general manager D Murung, chief officer, Budhwal Sharma and four other named officers."

Trouble arose six months later, when the loanee defaulted in returning the money as per the terms of the agreement, following which the bank decided to seize the gold and auction it .

"To our shock, we found that what we had accepted as gold was, in fact, nothing but gold-plated copper," a top official of the bank told rediff.com.

Refuting the charge of the Rastogis that the bank officials were responsible for stealthily replacing the gold with gold-plated copper, the bank official pointed out, "that is a baseless charge. Since the jeweller had been dealing with our bank for quite some time and was enjoying our confidence, we readily gave away the hefty loan without even imagining that he could play such a trick on us."

Sunil Rastogi, however, argues: "How can anyone dare to even think of depositing fake gold or gold-plated copper instead of the real stuff. After all, we are into such big business and we have credibility in the market."

He believes that the bank officials have conspired to play this trick on him.

While the bank and the loanee are trading charges and counter-charges, the police is suspecting a deeper mischief in the whole affair. "We will soon dig out the truth," said Lucknow district police chief B B Bakshi.

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