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PNB Fraud | Mehul Choksi used same assets for multiple loans, no official thought of verifying those documents

Mehul Choksi’s modus operandi under scanner; sleuths look into how fraud went undetected

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Mehul Choksi is one of the main accused in the Rs 12,636-crore PNB scam
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Main accused in the Punjab National Bank (PNB) fraud case, Mehul Choksi, who is the Gitanjali Group promoter, pledged same properties and brands as collateral to various banks to get loans and surprisingly none of the officials even thought of verifying those documents, investigators said on Friday.

Sources in the investigating agencies stated that Choksi had pledged his "Sangini Diamond" jewellery as a collateral while collecting loans for his two different companies - Gili India Limited and Gitanjali Gems Limited - from ICICI Bank. Officials said once the owner of the company was declared fraud, the brand value becomes zero.

Choksi pledged a residential property for two different sets of loans from Allahabad Bank in March 2013 and subsequently modified it in March 2016 and has an exposure of Rs 375 crore. The bank again gave another loan of Rs 750 crore to Choksi on the same flat. The total exposure to Allahabad Bank is Rs 1125 crore. This amount was lent to him for a 7,510-sq ft residential properties, comprising flat numbers 101, 201, 203, 301 and 303 in Kalina, Mumbai .

Shockingly, flat number 203 measuring 940 square feet that was pledged to Allahabad Bank was also pledged to two other banks - PNB and Axis Bank. The PNB lent Rs 175 crore. Again, for the same flat, the PNB gave Rs 75 crore to Choksi on December 12, 2012.

This loan was approved from the Brady House branch of PNB that is under the scanner for issuing Letters of Undertaking (LoUs) and Foreign Letter of Credits (FLCs).
The approval was given despite the fact that the PNB-led consortium already had an exposure of Rs 225 crore against Choksi and he had defaulted in repayment in May 2011.

"Choksi pledged flat number 201 at Kalina to PNB and Axis Bank when it was already pledged to Allahabad Bank. He did the same with flat number 303, pledging it to three banks - PNB, Axis and Allahabad Bank. Choksi also secured over Rs 440 crore from various public and private sector banks without pledging any collateral," said sources.

The probing agencies are recording statements of banks officials to find how such irregularities happened.

PNB Scam Probe

  • Choksi had pledged ‘Sangini Diamond’ jewellery as a collateral while collecting loans for 2 companies. He also pledged one residential property for two loans
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