Chennai jewellery chain dupes 14 banks of Rs 824 crore

A consortium of banks led by the State Bank of India has unearthed a scam to the tune of Rs 824.15 crore by Chennai-based Kanishk Gold Private Limited (KGPL).

This comes close on the heels of diamond merchant Nirav Modi defrauding Punjab National Bank (PNB) by syphoning off thousands of crores.

Two months after G D Chandrashekar, a general manager in SBI, Chennai, filed a complaint with the CBI, the agency on Wednesday conducted searches at the premises of KGPL and the accused after registering a case.

In the complaint, the SBI has accused promoters and directors of KGPL, Bhoopesh Kumar Jain and his wife Neeta, of "misrepresenting/falsifying records and financial statements" of the company by showing a rosy picture since 2009 for availing credit facilities from the bank.

"It is also revealed that M/s KGPL and its directors have diverted the funds detrimental to the rights and interests of the banks," the SBI stated in its complaint and accused KGPL of "manipulating records" and "shutting shop overnight."

"The accused persons have been contacted and have been asked to join the investigation," a CBI spokesperson said. Sources said Kumar and Neeta may be in Mauritius.

The SBI is the lead bank in the consortium of 14 public and private sector banks, including PNB, ICICI, HDFC and Corporation Bank, that have disbursed loans to the tune of Rs 824.15 crore.

The first signs of sickness in KGPL was first noticed in March 2017 when the company delayed payment of interest and the directors went out of reach.

When the consortium members visited the corporate office, factory and showrooms in and around Chennai, they did not see any activity in any of the facilities.

The SBI tops the liability list at Rs 240.46 crore, followed by PNB Rs 128.31 crore, Bank of India Rs 46.20 crore and Union Bank of India Rs 54.94 crore.

Since the security available with the banks to cover the loss is only Rs 158.65 crore in the form of immovable properties, plant and machinery, the banks decided to proceed with the filing of a complaint with the CBI after declaring all the loan accounts as "fraud".