Karnataka Bank discloses fraud of Rs 86.5-cr loans extended to Gitanjali Gems

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26 Aug, 2025 12:21

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Frauds do not seem to cease for the banking sector and now is the turn of Karnataka Bank.

The South-based private bank has reported a fraud totaling Rs 86.47 crore in loans extended to Gitanjali Gems.

“The bank has reported a fraud to Reserve Bank of India amounting to Rs 86.47 crore in the fund-based working capital facilities extended to Gitanjali Gems on account of non-realization of exports bills and diversion of funds,” said the bank in a BSE filing late on Wednesday.

The loan was extended under consortium arrangements, Karnataka Bank added. Karnataka Bank becomes the latest bank exposed to a wider loan fraud involving Gitanjali Gems.

The bank also said that it does not have any letter of undertaking (LoU) exposure to Gitanjali Gems, promoted by Mehul Choksi, uncle of Nirav Modi who is the main accused in the Punjab National Bank scam worth about Rs 13,000 crore that came to light on February 14.

Investigative agencies are probing a total of 31 private and state-run banks which in a consortium gave working capital loans worth Rs 5,280 crore to Gitanjali Group starting 2009.

This is over and above the Rs 13,000-crore fraud investigation involving fraudulent LoUs issued through PNB against which various overseas bank branches gave loans to Nirav Modi’s group firms and Gitanjali Group.