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  1. Another Nirav Modi? This Chennai-based jeweller Kanishk Gold is accused of whopping Rs 824 crore bank fraud

Another Nirav Modi? This Chennai-based jeweller Kanishk Gold is accused of whopping Rs 824 crore bank fraud

In yet another fraud played on banks, a Chennai-based jeweller Kanishk Gold Pvt Ltd (KGPL) has been accused of defrauding a consortium of 14 banks led by the State Bank of India (SBI) to the tune of Rs 824 crore in the form of loans that have now been declared as non-performing asset (NPA).

By: | New Delhi | Updated: March 21, 2018 7:42 PM
Nirav Modi, nirav modi fraud case, chennai, Kanishk Gold Pvt Ltd, sbi, NPA,  Mehul Choksi, gitanjali group, pnb fraud case It is apprehended that the Directors of the KGPL, Bhoopesh Kumar Jain, and his wife Neeta Jain may have fled the country. (Photo source: Website)

In yet another fraud played on banks, a Chennai-based jeweller Kanishk Gold Pvt Ltd (KGPL) has been accused of defrauding a consortium of 14 banks led by the State Bank of India (SBI) to the tune of Rs 824 crore in the form of loans that have now been declared as non-performing asset (NPA). It is apprehended that the Directors of the KGPL, Bhoopesh Kumar Jain, and his wife Neeta Jain may have fled the country. Unlike the scam involving diamond jeweller Nirav Modi and Mehul Choksi of the Gitanjali Group worth Rs 13,540 crore, in which Letters of Undertaking (LoUs) were used, the KGPL allegedly resorted to falsifying records and financial statements to get loans from the banks over a 10 year period beginning 2008.

The SBI tops the list with Rs 240 crore of loans followed by Punjab National Bank (PNB) (Rs 128 crore), Bank of India (Rs 46 crore), IDBI (Rs 49 crore), Syndicate Bank (Rs 54 crore), Union Bank (Rs 53 crore), Uco Bank (Rs 45 crore), Central Bank (Rs 22 crore), Corporation Bank (Rs 23 crore), Bank of Baroda (Rs 32 crore), Tamil Nadu Mercantile Bank (Rs 27 crore), HDFC (Rs 27 crore), ICICI Bank (Rs 27 crore) and Andhra Bank (Rs 32 crore).

In a complaint to the Central Bureau of Investigation (CBI) in January this year, the SBI cited a forensic audit conducted into the acounts of the company and found that the KGPL and its directors including Bhoopesh Kumar Jain and his wife Neeta Jain in collusion with the statuatory auditors had been misrepresenting and falsifying records with a clear criminal and malafide intent to cheat and defraud the banks.

The KGPL was accused of showing a rosy picture since 2009 for the purpose of availing credit facilities from the bank and thereby committed criminal breach of trust and cheated the lenders. “The facts and circumstances and the admission by the Managing Director of the company also confirms the removal of the stocks secured to the lenders without the knowledge of the lenders and thereby committed criminal misappropriation of secured assets and cheated the lenders.

“It is also revealed that the KGPL and its Directors have diverted the funds detrimental to the rights and interests of the banks. The account has been classified as the NPA as per the extant guidelines of the Reserve Bank of India (RBI) by all the lenders of the consortium,” said the complaint by G.D. Chandrasekhar, General Manager, SBI Mid Corporate Regional Office, Chennai.

The forensic audit revealed that the statutory auditors and stock audiotors had failed to record the deficiencies in the financial records and asset registers of the company which have adversaly affected the banks interests. The forensic audit also revealed various discrepancies in the form of over valuation of the stocks and incorrect quantity of stock in the stock valuation workings records maintained by the company. The company had not maintained proper records for the movement of goods among other things.

The total loss to the banks due to the fraud is to the tune of Rs 824.15 crore (outstanding as on December 12, 2017) plus accrued interest from January this year. The security available with the bank to cover the loss is to the tune of around Rs 158.65 crore being the realisable value of the immovable properties, plant and machinery charged to the lenders.

The SBI complaint said in the joint lenders forum meeting on November 8 last year it was decided to proceed with the filing of complaint with the CBI after declaring the loan account as fraud. The bank urged the investigating agency to proceed against the KGPL, its directors Bhoopesh Kumar Jain and his wife, its auditors Tejraj Achha, Ajay Kumar Jain, Sumit Kedia and other unknown persons. It also said the role of the public servants if any may be looked into during the course of investigation.

The complaint said sign of sickness was noticed in the company delayed servicing interest for March 2017 in respect of eight members banks. Further, the complaint said, interest was not paid for all the member banks for April 2017. The promoter was unavailable for follow-up. When the stock audit was initiated in April 2017 for the proceeding quarter, the KGPL did not facilitate stocks and receivables audit process.

Subsequently, in May last year, consortium members visited the corporate office, factory and showrooms and found that there was no activity. On the same day, Bhoopesh Kumar Jain gave a letter admitting falsification of records since 2009 and removal of the stocks secured to the lenders. Joint inspection was again conducted and it was observed that there was no activity and no stock in the factory. The showrooms at the other centres were also found locked during visits by consortium members.

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  1. Nagaraju Bommanahalli
    Mar 22, 2018 at 4:15 pm
    Both congress and the BJP politicians are both involved in the scam in few years all pSU banks becomes bankruptcy because all bank gave loan to big companies without proper security Vijay Malaya Kingfisher house value in market is Rs50cores but banks in ed the same to Rs120cores and gave loan Rs120cores to him same type all banks gave huge loan to big companies without proper security in few years India becomes bankruptcy. if big Modi does not taken action he will be go to shoe racks in next election
    Reply
    1. Kantichand Rampuria
      Mar 22, 2018 at 4:09 pm
      All the big jewellers have the same story. It is surprising that the authorities new about the discrepencies since April 2017 and did not act for so long.the directors may have fled from country by now.who is to be blamed.there is a nexus umongst the officers and owners every where.
      Reply
      1. Maneesh Kumar B
        Mar 22, 2018 at 3:58 pm
        Comman man goes to bank,ask for loan ,bank says no no no no..... Business man goes to bank,asks for loan,bank says yes yes yes yes........
        Reply
        1. Raghu Sampath
          Mar 22, 2018 at 10:27 am
          O e we find lot of bank frauds committed by businessmen in connivance with bankers in some cases. The internal audit RBI audit concur audit etc for what?Wherever the bank officials are in collusion,the properties of the concerned officials should be confiscated and terminal benefits stopped. The passports of the officials and family members should betaken away. If the property documents are forged the advocate who gave legal opinion must be taken to task. The best way is to make it mandatory for all business people who have bank loans and want to fly abroad to obtain No objection certificate from the banks. Any official who issues NOC without verifying the account should be put behind the bars and later tried in court of law.
          Reply
          1. Prasad Rangdal
            Mar 22, 2018 at 8:59 am
            Again CA being integral part of fraud.....what's happening!!!!!!......the ins ute of chartered accountants should come out and take responsibility of these frauds and take action against it's so called members.....the ICAI certainly failed in it's adminstration and controls.......before the people of the country loose faith in ICAI and CA....plz do something else u might be the reason for bringing down India it's economy n it's growth.....
            Reply
            1. Murali Dharan
              Mar 22, 2018 at 7:51 am
              Feel sorry for the poor guy . Anything less than 10000 crore is a lousy figure.
              Reply
              1. Raghu AL
                Mar 22, 2018 at 7:13 am
                When a common man ask for loan the bank officials look into it ten times. Why not in such ing characters case. I will fully blame the bank officials they are incompetent . First Malta next Nirav and now this er . I don't understand how this MC escape from the country. These s should be bought back to India .
                Reply
                1. Saikumar C Krishna
                  Mar 22, 2018 at 5:50 am
                  I am extremely ashamed to proclaim on three counts: That I am an Indian, ex banking professional, qualified accountant. There is absolute lack of ethics, accountability and social responsibility. I shouldn't be blaming other sources of contributing factors when there is sheer lack of self pride, morality and will to act conscience. Pity this land which taught the vicious and harsh difference between Dharma and Adharma had chosen the path of Adharma to move forward.
                  Reply
                  1. Aditya Karan
                    Mar 21, 2018 at 8:41 pm
                    Its okay as long as big businessman and politicians do the fraud. The money can be retrieved in the form of minimum balance schemes, atm charges, SMS charges and other charges created on-the-fly from the general public. If you somehow dont throw your money at some of the worst banks(SBI,PNB etc) in the world. You risk your money being demonitised by our great leaders. Its okay as long as public pays. Its okay as long as poor pays.
                    Reply
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