Another bank fraud of Rs 824 cr involving Chennai jeweller

New Delhi: 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 accounts of the company and found that the KGPL and its directors including Bhoopesh Kumar Jain and his wife Neeta Jain in collusion with the statutory 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 confirm 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 auditors had failed to record the deficiencies in the financial records and asset registers of the company which have adversely affected the banks interests.