PNB fraud investigation: Big fish IDBI Bank falls off the radar?
While investigating agencies have begun questioning top management of trophy banks such as ICICI Bank and Axis Bank in the Nirav Modi-Mehul Choksi fraud investigation, they may have missed out on one another particular bank which had lent out huge sums of money. The big fish in the business loans, including working capital loans, given to Mehul Choksi's Gitanjali Gems is neither ICICI, nor Axis. Instead, it's the government-owned IDBI Bank and its subsidiary IDBI Trusteeship Services.
IDBI Bank and its subsidiary IDBI Trusteeship Services gave around Rs 4,462 crore in loans to Gitanjali Gems, documents obtained by Business Today show. The amount is far higher than Rs 405 crore in loan extended by ICICI Bank to Gitanjali Gems and Axis Bank's Rs 200-crore loan to the Gitanjali Group. Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs on March 6 questioned big names in the banking circle such as ICICI Bank's Chanda Kochhar and Axis Bank's Shikha Sharma in relation to the probe in Mehul Choksi's Gitanjali Gems fraud.
In fact, the bank's subsidiary IDBI Trusteeship Services alone gave loans worth Rs 4,055 crore to Gitanjali Gems. It gave a Rs 3,810-crore loan to Gitanjali Gems as recently as April 17, 2015 when MS Raghavan was the managing director of the trusteeship. Raghavan was appointed the MD of bank on July 5, 2013. He retired from the top post on June 30, 2015. Before taking over as MD, Raghavan was an Executive Director at Bank of India from January 1, 2012 to July 5, 2013.
IDBI Trusteeship Services in which IDBI Bank has 54.70% stake has LIC of India (29.84%), GIC (14.92%) and others (0.54%) as other shareholders, according to the website of the trusteeship.
The Trusteeship was formed on March 8, 2001 and registered with Sebi on September 4, 2001. The subsidiary of IDBI Bank offers debenture trustee, security trustee, securitization trustee, share pledge trustee, and ESOP and employee welfare trustee services.
The trusteeship awarded another loan worth Rs 245.3 crore to Gitanjali Gems on October 17, 2011 when SK Mitter was the MD that time.
Email queries on the status of Rs 4,055 crore loans sent to IDBI Trusteeship Services MD and CEO remain unanswered. Currently, Swapan Kumar Bagchi is the MD and CEO of IDBI Trusteeship Services.
IDBI Trusteeship Services has IDBI Bank (54.70%), LIC of India (29.84%), GIC (14.92%) and others (0.54%) as its shareholders, according to the website of the trusteeship.
The lender in which the government has 77.79% stake awarded loans worth Rs 407.36 crore to Gitanjali Gems from 2010 to 2013.
Of the three disbursals, loan worth Rs 30 crore was given on March 22, 2013 when RM Malla was its MD. Another loan worth Rs 327.36 crore was granted on November 18, 2011 under Malla at the top post.
On November 16, 2011, the bank gave Rs 50 crore to Gitanjali Gems.
Email queries on Rs 407.36 crore loans sent to the current bank MD and CEO Mahesh Kumar Jain remain unanswered.
Though some reports say summons will be issued to top officials of all 31 banks which were exposed to loans from Nirav Modi and Mehul Choksi's firms, it is still unclear why investigations have not thrown light on IDBI Bank's generosity in granting loans to the perpetrators of India's largest banking fraud.
The bank reported a fifth straight quarterly loss for the quarter ending December 2017 on a rise in provisions for bad loans.
Net loss for the quarter ending December 31 narrowed to Rs 1,524 crore ($239.63 million), from Rs 2,255 crore in the corresponding quarter a year earlier.
Gross bad loans as a percentage of total loans stood at 24.72 per cent at end-December, compared with 24.98 per cent in the previous quarter and 15.16 per cent a year ago.
Provisions for bad loans rose 16.4 percent to Rs 3,650 crore. The bank's capital adequacy ratio stood at 11.93%.
