Now, Karnataka Bank becomes victim of Gitanjali Gems; unearths Rs 86 crore loan fraud

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Updated: March 29, 2018 3:11:20 PM

Within one-and-half-month of the unravelling of India's biggest banking scandal in the state-run Punjab National Bank, another illicit transaction has been detected at the Mangalore-based private sector lender Karnataka Bank involving under-probe jeweller Gitanjali Gems.

The downtrodden Gitanjali Gems has been under the scanner in connection to the alleged involvement of the promoter Mehul Choksi in the mega banking scam.

Within one-and-half-month of the unravelling of India’s biggest banking scandal in the state-run Punjab National Bank, another illicit transaction has been detected at the Mangalore-based private sector lender Karnataka Bank involving under-probe jeweller Gitanjali Gems. The diamond merchant Nirav Modi and his uncle Mehul Choksi were the main accused in the so-called nation’s biggest banking fraud of Rs 11,400 crore which got escalated to Rs 13,600 crore. Mehul Choksi-led Mumbai-based jeweller Gitanjali Gems has emerged in defrauding Karnataka Bank Ltd to the tune of Rs 86.47 crore. However, Karnataka Bank has said that the bank doesn’t have any exposure to the LoU (Letters of Understanding) issued by Punjab National Bank.

“The Bank has reported a fraud to Reserve Bank of India amounting to Rs 86.47 crore in the fund based working capital facilities extended to Gitanjali Gems Ltd on the account of non-realisation of exports bills and diversion of funds and however, Bank does not have any LoU exposure in the aforesaid company. The said working capital facilities were extended by the Bank under consortium agreement and necessary provisions will be made as per the extant RBI guidelines,” Karnataka Bank said in a late-night exchange filing.

The downtrodden Gitanjali Gems has been under the scanner in connection to the alleged involvement of the promoter Mehul Choksi in the mega banking scam. The investigative agencies such as Enforcement Directorate, the Crime Bureau of Investigation and the anti-fraud agency SFIO (Serious Fraud Investigation Office) are probing Gitanjali Gems in the case relating to the working capital facilities amounting to about Rs 5,000 crore, forwarded by a consortium of 31 banks.

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