Probe Focuses On Whether Loans Diverted By Mehul Choksi's Unlisted Firms

The Serious Fraud Investigation Office (SFIO) is probing whether working capital loan was diverted into any of Mehul Choksi's unlisted companies and siphoned off

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Probe Focuses On Whether Loans Diverted By Mehul Choksi's Unlisted Firms

PNB fraud: Punjab National Bank has been hit by a Rs 12,600 crore fraud


Mumbai:  Beyond the Rs 12,600 crore fraud reported by Punjab National Bank (PNB), several other private and public sector banks could also be at risk of losing their money as Gitanjali Group is in no position to repay working capital loans worth Rs 5,280 crore, people familiar with the matter said.

The Serious Fraud Investigation Office (SFIO) is probing whether this money was diverted into any of Mehul Choksi's unlisted companies and siphoned off, the people said.

ICICI Bank chief executive Chanda Kochhar and Axis Bank chief executive Shikha Sharma were  summoned by the SFIO to help the agency understand the amount of exposure and whether due diligence was followed while lending. While top officials of Axis Bank have met SFIO officials on Tuesday, ICICI Bank has submitted all details to SFIO in the Gitanjali Group investigations, an official with direct knowledge of the matter said.

Mehul Choksi's Gitanjali Group has not repaid working capital loans of nearly Rs 5,280 crore to a consortium of 31 banks, including ICICI Bank and Axis Bank, people familiar with the matter said. Some PNB officials are also expected at the SFIO's Mumbai office today. PNB has lent Rs 587 crore as working capital, while ICICI Bank has lent Rs 405 crore to Mr Choksi's firms.

ICICI Bank led a consortium of 31 banks that lent money to the Gitanjali Group. People familiar with the matter said senior officials are only being questioned for clarifications and not as accused in the fraud case.

Working capital is used to finance operations of a company; it is not used to buy long-term assets or investments, but used to cover costs such as salaries and other expenses.

ICICI Bank had said it did not have any exposure to Nirav Modi group of companies but was only lending working capital to the billionaire jeweller's firm along with several other banks.

The CBI had earlier questioned ICICI Bank executive director NS Kanan as part of its probe. Now, the SFIO has approached other lenders which have exposure to the firms promoted by Nirav Modi and Mehul Choksi.

The SFIO has asked the senior executives of the 31 banks who have lent money to firms promoted by Nirav Modi and Mehul Choksi to be present at its office in Mumbai.


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