THE Enforcement Directorate has expanded its probe against diamantaires Nirav Modi and Mehul Choksi to include loans taken by them from 16 other banks over the past few years, apart from the Punjab National Bank. This may take the quantum of alleged losses caused by them to banks to nearly Rs 20,000 crore, said sources.
ED Director Karnal Singh has written to the banks for details of the loans given to the two, the present status of the loans, the collaterals offered, and the form and nature of the loans.
“We are at present seeking information from banks which have given bigger loans. We have learnt that these loans have been granted at collaterals which are just 12 per cent of the total value of the loans. We want to see on what basis these loans were granted and whether these are still recoverable. However, we have not asked any bank to file a complaint with us,” an ED official said.
Sources said that the CBI and ED probe into the alleged Rs 11,400-crore fraud perpetrated by Modi and Choksi on PNB indicates that more than two dozen banks may have been exposed to loans ranging between Rs 5,000 crore and Rs 10,000 crore.
Both Choksi and Modi, who left the country just before PNB lodged a complaint of fraud, haven’t replied to summons. With the authorities attaching their properties and accounts, they are unlikely to be in a position to pay the loans any time soon. The government on Saturday revoked their passports. On February 16, the Ministry of External Affairs had suspended the validity of their passports with immediate effect for a period of four weeks, and had given them a week’s time to respond as to why their passports should not be impounded or revoked.
Sources said that till March 31, 2017, Mehul Choksi and his companies Geetanjali Gems, Gili India and Nakshatra Brand owed close to Rs 3,000 crore in the form of 37 bank loans. As reported in The Indian Express on February 16, Modi’s firms too have outstanding loans amounting to Rs 3,000 crore, to 17 banks — including Central Bank of India (Rs 194 crore), Dena Bank (Rs 153.25 crore), Vijaya Bank (Rs 150.15 crore), Bank of India (Rs 127 crore), Syndicate Bank (Rs 125 crore), Oriental Bank of Commerce (Rs 120 crore), Union Bank of India (Rs 110 crore), IDBI Bank and Allahabad Bank (Rs 100 crore each).
PNB itself lent another over Rs 1,700 crore to the companies of Modi and Choksi, that remains outstanding.
Three partnership firms of the two diamantaires — Diamonds R Us, Solar Exports and Stellar Diamonds — are under probe in the PNB fraud case. These too are being probed for additional bank loans.
Sources said a lot of these loan accounts are in the category of special mention account of second category, which means they are close to becoming NPAs (non-performing assets).
The Indian Express had also reported earlier how Gitanjali Gems Ltd, owned by Choksi, defaulted on timely repayments of loans taken from Life Insurance Corporation of India, ICICI Bank and IDBI Bank, according to the Secretarial Audit Report and Independent Audit Report conducted on the company’s accounts for 2016-17.
The report revealed how the companies of Modi and Choksi, year after year, reported huge amounts stuck with “sundry debtors”, which were at times more than their turnover, and reported low profits, and yet kept getting loans.
The three companies under probe, Diamonds R Us, Solar Exports and Stellar Diamonds, too reported very low profits, even as they took significant loans. Diamonds R Us, for instance, recorded profits of Rs 4.90 crore while it took “unsecured loans” of Rs 2,197.70 crore during the assessment year 2017-18 (financial year 2016-17), sources said.
Stellar Diamonds made a profit of Rs 7.26 crore but took loans of Rs 1,713.90 crore during assessment year 2017-18. The company had a turnover of Rs 2654.90 crore and trade receivables of Rs 2665.10 crore.
Similarly, Solar Exports too reported profits of Rs 2.07 crore but raised loans of Rs 981.23 crore during assessment year 2016-17, the latest year for which data is available.
“It is perplexing how banks kept advancing loans on such low profits and without probing who these sundry debtors were. It is normal practice to check each and every sundry debtor, particularly in this case where the amounts were so huge, before advancing fresh loans,” a former Price Waterhouse Coopers auditor told The Sunday Express.