Another bank fraud revealed! This one involves Gitanjali Gems and Rs 86.5 crore

Privately-run Karnataka Bank has informed the Reserve Bank of India (RBI) that Gitanjali Gems of scam-hit Mehul Choksi had committed a Rs 86.5 crore fraud in the fund-based working capital. "We have reported a fraud to the RBI amounting to Rs 86.47 crore in the fund-based working capital facilities extended to Gitanjali Gems on account of non-realisation of export bills and diversion of funds," said the Mangaluru-based bank in a regulatory filing on the BSE late on Wednesday night.

The scheduled commercial bank, however, clarified it does not have any Letter of Understanding (LoU) exposure in Choksi's company.

"The working capital facilities were extended by the bank under consortium arrangement and provisions will be made as per the RBI guidelines," the bank`s Company Secretary Prasanna Patil said in the filing.

Choksi and his nephew Nirav Modi are already facing investigation in the Rs 13,540-crore fraud they committed on the state-run Punjab National Bank's Mumbai branch, which came to light after they left the country in early January.

Meanwhile, shares of Gitanjali Gems continued to remain weak. The stock tanked a whopping 87 per cent in the last 30 days since the PNB fraud came into light, slipping below its face value of Rs 10. On Wednesday, the stock settled at Rs 8.35 on the BSE.

The company's market valuation has been eroded by nearly Rs 600 crore in these 30 days.