CBI files FIR in Rs 824 crore loan fraud by Kanishk Gold, searches promoters' addresses

The Central Bureau of Investigation (CBI) has filed a case of alleged loan fraud to the tune of Rs 824.15 crore against Chennai-based Kanishk Gold Pvt Ltd. The case has been registered following a complaint from a 14-bank consortium led by the State Bank of India (SBI).

The central agency later carried out searches at the official and residential premises of promoters of Kanishk Gold Pvt Ltd as it began investigation in the Rs 824-crore loan fraud case. Kanishk is owned by promoters and directors Bhoopesh Kumar Jain and his wife Neeta Jain.

The CBI officials said they have received the complaint and were in touch with the bank because of certain loopholes in the complaint which were to be rectified by the bank.

Kanishk Gold used to manufacture gold jewellery, which was marketed under the brand name 'Krizz'. It sold its products via distributors till 2014, but changed business model to B2B (business-to-business) in 2015 supplying to large retail jewellers, the SBI said in the complaint to the CBI.

The loan accounts of the company were taken over by the SBI from the ICICI in 2008. Its banking arrangement was converted into a multiple banking arrangement in March 2011, the biggest state-owned lender said.The 14-bank consortium led by the SBI had given a loan of Rs 842.15 crore to Kanishk Gold. However, with interest on the principle amount, the total figure would go over Rs 1000 crore. Kanishk first defaulted reportedly in March 2017 in interest payments to eight member banks. And later, stopped payments to all 14 banks.

In its complaint, SBI alleged that while Rs 824.15 crore have been defrauded from the consortium, the security available with the it to cover the loss is only around Rs 156.65 crore.

Among the banks who lent money to Kanishk are: the SBI, PNB, Union Bank of India, Syndicate Bank, Bank of India, IDBI Bank, UCO Bank, Tamilnad Mercantile Bank, Andhra Bank, Bank of Baroda, HDFC Bank, ICICI Bank, Central Bank of India and Corporation Bank. The SBI has the highest exposure of Rs 215 crore following by PNB which has given Rs 115 crore to Kanishk. The Union Bank of India and Syndicate Bank offered Rs 50 crore each.

The lenders visited Kanishk's corporate office, factory and showroom on May 25, 2017. However, the office and showrooms were shut by then. The State Bank informed the CBI about the fraud on January 25 and charged Kanishk with 'manipulating records, shutting shop overnight'. Bankers were unable to contact the Kanishk promoters.

Last year in November, the SBI declared the account fraudulent to the RBI. The company's account was declared fraud and non-performing asset (NPA) in 2017-18 by various lending banks, it alleged.

SBI has alleged that the company had "misrepresented and falsified" the records and financial statements of the company to show a "rosy picture" since 2009 to avail credit facilities from it. Kanishk Gold Pvt Ltd and its directors allegedly diverted the funds detrimental to the rights and interests of the bank, the bank said.

This is the latest in a series of bank frauds unearthed in the last couple of months. In February, the PNB detected fraudulent transactions of over Rs 11,000 crore which later turned into a Rs 13,000 crore scam.

Earlier this week, the Economic Offences Wing of Delhi Police uncovered seven cases of alleged loan fraud of Rs 3.5 crore at Punjab National Bank. In another case, the Economic Offences Wing of Mumbai police arrested three directors of a private firm - Parekh Alluminex Ltd - for allegedly defrauding banks of Rs 4,000 crore.