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PNB fraud case: Lenders seek forensic audit of Gitanjali group's books

Abhijit Lele/Mumbai 15 Feb 18 | 02:59 AM

Lenders to the Mehul Choksi-led Gitanjali group have ordered a forensic audit of the jewellery firm after Punjab National Bank (PNB) named him in a complaint filed with the Central Bureau of Investigation (CBI) against jeweller Nirav Modi and his relatives through a clutch of companies they own. 


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With a large-scale fraud in the gems and jewellery industry, banks would now be reluctant to take additional exposure to this sector, senior public sector bank (PSB) executives said. 

Banks, including PNB, had earlier taken a hit for their exposure to Winsome Diamonds, whose promoters were declared wilful defaulters.

The Gitanjali stock was down 6.7 per cent at Rs 58.6 per share on the BSE. 

Three bank executives said the Delhi-based PNB had flagged Choksi’s name. “Before forming any view and taking action on Choksi-owned entities, banks would like to have clear idea about his role. The forensic audit will help in securing clarity. We cannot proceed against his entities just on the basis of concern expressed by PNB." 

Bankers said the Gitanjali group had a standard account with IDBI Bank and Dena Bank. ICICI Bank is the lead lender in the consortium of banks that have exposure to the jeweller.

According to Gitanjali Gems’s 2016-17 annual report, over 30 lenders had exposure to the company, including State Bank of India, Standard Chartered Bank, Bank of India and Bank of Baroda.

The company has informed the BSE that its quarterly results could not be finalised due to pressing contingencies. It did not elaborate on what those contingencies were.

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