A Nirav Modi Rerun in Tamil Nadu by Kanishk Gold

A Nirav Modi Rerun in Tamil Nadu by Kanishk Gold – though of much smaller proportions

A Nirav Modi Rerun in Tamil Nadu by Kanishk Gold – though of much smaller proportions

In a Nirav Modi style Bank fraud, a celebrated jeweler of South India – Kanishk Gold Pvt Ltd, has been accused of duping a consortium of banks led by the state bank of India of a sum of Rs 824.15 crore. While the lenders have requested the CBI to inquire officially into the matter, the accused is suspected to have fled to Mauritius.

Jewelry Chain Kanishk Gold Scammed State Bank of India Consortium with Rs 824.15 crore?

Jewelry chain Kanishk Gold is at the center of this most recent high-profile bank fraud.

India s biggest Bank fraud

It has barely been a month that India s biggest Bank fraud had come to light – thanks too internationally acclaimed jeweler Nirav Modi and his associates.

Now in a case similar to it is being reported from Tamil Nadu – the accused jewelry chain hails from Chennai and is registered somewhere in the city’s T Nagar area.

The owners of the company are Bhoopesh Kumar Jain and his wife Neeta Jain, both of whom are the promoters and the directors of Kanishk Gold.

CBI Inquiry into Kanishk Gold Scam?

Before approaching the CBI (Central Bureau of Investigation) to request an inquiry, the banks had unsuccessfully attempted to get in touch with the accused. The banks believe that the couple has fled to Mauritius by now. The CBI is yet to file an FIR (First Information Report) in this regard.

SBI led the consortium of banks that included 14 other banks from both the public and private sectors and together they gave away loans worth nearly Rs. 824 crores to the accused.

Kanishk Gold shut shop after the SBI loan crossed 1000 crore

SBI has charged the Kanishk Gold of “manipulating records, shutting shop overnight” in its January 25 letter sent to the CBI. The banks had loaned a principal amount of Rs. 824 crores and when combined with interest accrued, the total amount due crossed the 1000 crore mark said the banks.

The forgery was first reported to the Reserve Bank of India by SBI on November 11, 2017. Other banks followed suit by January this year.

State Bank of India

State Bank of India

According to the allegations made by SBI, the first default in repayment of the loan by Kanishk Gold took place in March 2017. By the next month, all payments to all of the lending banks had been stopped by the company.

Kanishk loans started back in 2007

To the dismay and horror of the representatives of the lending banks, they found that both the factory as well as the showroom of the company had been shut down and all facilities along with all stocks of jewelry were missing, when the representatives went to visit those places on May 25, 2017. Bhupesh Jain reportedly acknowledged his fault in a letter to the banks the very same day. The bankers found that all of the other outlets of the company that they visited subsequently had also been abandoned by the company in a similar manner.

“The company shut down as early as May 2017 since it couldn’t cope with the losses,” said the Madras Jewellers and Diamond Merchants Association.

The loans that were given to Kanishk started back in 2007, according to the letter from the SBI. The credit limit, as well as the working capital loan limit to the company, was increased in the subsequent years.

Metal Gold Loan (MGL)

Granting of Metal Gold Loan (MGL) was sanctioned by the bank consortium led by the SBI in 2012 to Kanishk Gold. “Using this option, Kanishk would purchase gold in the form of bullions from nominated banks in the consortium or from the open market using credit under MGL or from its current account,” said SBI.

“SBI would be in a better position to answer questions. Our exposure to Kanishk is small, compared to other banks. We have extended a working capital loan of about Rs 20 crore,” said R Soundarajan, AGM, Corporation Bank, of the banks in the consortium.