Gitanjali Gems: Karnataka Bank informs RBI of huge fraud
today Mar 30, 2018
Karnataka Bank Ltd informed the Reserve Bank of India (RBI) that, although not exposed to any letters of undertaking (LoU), it was defrauded to the tune of 86.5 crore rupees (approximately 13 million US dollars) by Gitanjali Gems.
The privately run Karnataka Bank Ltd, which is based in Mangaluru, made a filing on the Bombay Stock Exchange (BSE) on the night of March 28 which stated that Gitanjali Gems had committed a fraud of 86.5 crore rupees at their firm. "We have reported a fraud to the RBI amounting to Rs 86.47 crore in the fund-based working capital facilities extended to Gitanjali Gems Ltd on account of non-realisation of export bills and diversion of funds," read the filing.
The filing did clarify, however, the fraud was not connected to the LoUs used by both Nirav Modi and the head of the Gitanjali Group Mehul Choksi in order to obtain loans through false information. The fraud was in the fund based working capital and comes on top of the fraud allegations already made against Choksi for his business dealings with his group of companies.
"The working capital facilities were extended by the bank under consortium arrangement and provisions will be made as per the RBI guidelines," Prasanna Pati, the Company Secretary of Karnataka Bank said in the filing.
Mehul Choksi, along with Modi, are still out of the country after leaving before the scandal broke. Both have so far refused to come back citing business abroad and security concerns. The Indian Government has revoked both of their passports but there are theories that they could also have foreign papers.
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