Karnataka Bank has disclosed a loan fraud amounting to Rs 86.47 crores involving Mehul Choksi owned Gitanjali Gems. The Mangalore based private bank on Wednesday disclosed that it had reported the fraud to the Reserve Bank of India on fund based working capital facilities extended to the company.
The bank has added that since the loan was extended under consortium arrangements, they do not have any Letters of Undertaking (LoU) exposure to Gitanjali Gems. The fraud has been reported on account of non-realisation of export bills and diversion of funds.
With this disclose, the Karnataka Bank has become the latest bank to have been exposed to the widespread loan fraud of Gitanjali Gems. Currently, a large consortium of 31 private and government-owned banks are under scanner for a Rs 5280 crores loan fraud allegedly committed by Gitanjali Gems. The loans were being issued since 2009.
According to reports, the 5280 crores bank fraud is over and above the 13,000 crore PNB scam. In the PNB scam loans were issued to various firms owned by Nirav Modi and Mehul Choksi by overseas banks over fraudulent LoUs issued through the Punjab National Bank.
The Income Tax department and the ED are currently in the process of attaching the properties and bank accounts of both Nirav Modi and Mehul Choksi owned firms. The income tax department had attached an SEZ property in Hyderabad owned by the Gitanjali Group in February which was valued at Rs 1200 crores.
Mehul Choksi’s Gitanjali Gems is also under the scanner for alleged irregularities involving the 20:80 scheme to import gold. In the wake of the loan fraud, the Securities and Exchange Board of India had last month revived investigations in an old case of alleged manipulative tradings against Gitanjali Gems. Several people have been arrested and the passports of both Mehul Choksi and his nephew Nirav Modi have been revoked by the government.