Karnataka Bank discloses Rs. 86 crore fraud

The South-based Karnataka Bank has reported a fraud amounting to Rs. 86.47 crore in loans extended to Gitanjali Gems, headed by Mehul Choksi.

The bank, in a BSE filing late on Wednesday, said that it reported a fraud to RBI amounting to Rs 86.47 crore in the fund-based working capital facilities extended to Gitanjali Gems. 

The bank added that the loan was extended under consortium arrangements and the fraud occurred due to non-realization of export bills and diversion of funds. However, the bank does not have any Letter of Undertaking exposure to Gitanjali Gems.

The Mangaluru-based bank also said that it will be making necessary provision for the loans as per RBI guidelines.

Investigative agencies are already probing over 30 state-run and private banks which in a consortium have given loans of Rs. 5,280 crore to Gitanjali Group. Mehul Choksi, along with his nephew Nirav Modi, is also facing investigation in the Rs.13,540-crore fraud committed through PNB's Mumbai branch.