Chennai-based jewellery chain Kanishk Gold Pvt Ltd has defrauded nearly 14 banks on a loan worth Rs 842.15 crore.
The CBI today registered a case against Chennai-based jewellery chain Kanishk Gold for defrauding a consortium of 14 banks led by State Bank of India (SBI) on loans amounting to Rs 842.15 crore.
CBI today conducted searches at the official and residential premises of accused persons and Kanishk Gold at various places in Chennai.
The accused persons have been contacted and asked to join the investigation.
State Bank of India, which was leading a consortium of 14 public and private sector lenders to give loans to Kanishk Gold Pvt Ltd (KGPL),had requested the CBI in January to investigate the jewellery chain for the loan fraud.
In a letter dated January 25, 2018 to the CBI, SBI charged Kanishk with "manipulating records, shutting shop overnight." The bank had declared the account fraudulent to the RBI on November 11, 2017. All other members followed suit and declared the account as fraudulent to the regulator.
The loan amount of Rs 824 crore may swell up to more than Rs 1,000 crore after adding the interest component, the report said.
Kanishk Gold, which has a registered office in T Nagar in Chennai, is owned by promoters and directors Bhoopesh Kumar Jain and his wife Neeta Jain. The bankers have been unable to contact them since its stock audit was initiated on April 5, 2017.
KGPL manufactured gold jewellery which was marketed under the brand name "KRIZZ" at their manufacturing unit at Natarajapuram village, Pukkathurai, Maduranthagam taluk and Kancheepuram district.
The jeweller first defaulted in March 2017 where the firm failed to pay interest to eight member banks. Kanishk stopped payments to all the 14 banks by April 2017, SBI stated. Following this, the bankers visited Kanishk's corporate office, factory and showroom on May 25 2017, but they found that the facilities were shut with no activity and stock.
The same day, Bhoopesh Jain wrote a letter to his bankers admitting to falsification of records and removal of stocks that were secured as collateral to the lenders.
Bankers found other showrooms of the jeweller had also been locked.
"The company shut down as early as May 2017 since it couldn't cope with the losses," a representative from the Madras Jewellers and Diamond Merchants Association told Times of India.
Banks have been sanctioning loans to Kanishk Gold since 2007. The loan accounts of KGPL were taken over by the SBI from ICICI in teh year 2008 with the sanction of working capital limits to the tune of Rs 50 crores and term oan imits to the tune of Rs 10 crores. In March 2011, this was converted into a multiple banking arrangement with Punjab National Bank and Bank of India.
SBI had sanctioned granting of metal gold loan (MGL) to Kanishk in 2012.
"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," SBI said.
Here's a list of loans issued by several banks to Kanishk —
State Bank of India extended loans to the tune of Rs 215 crore, Punjab National Bank Rs 115 crore, Union Bank of India Rs 50 crore, Syndicate Bank Rs 50 crore, Bank of India Rs 45 crore, IDBI Bank Rs 45 crore, UCO Bank Rs 40 crore, Tamilnad Mercantile Bank Rs 37 crore, Andhra Bank Rs 30 crore, Bank of Baroda Rs 30 crore, HDFC Bank Rs 25 crore, ICICI Bank Rs 25 crore, Central Bank of India Rs 20 crore and Corporation Bank Rs 20 crore.
Audits of Kanishk's financials were done by Ajay Kumar Jain partner at Ajay & Co Chartered Accountants and Sumit Kedia, partner, Lunawath & Associates.