India’s second largest bank loan default case has Surat connection, CBI probing the case

Surat, 20 August 2014

India’s second largest bank loan default case has Surat connection.

Malabar Hills, Mumbai based Jatin Mehta led Winsome Group, which is into diamond trading, has now accumulated defaults of Rs 6,581 crore on loans from a consortium of 15 public sector banks including Punjab National Bank (PNB) and Central Bank— bringing it in competition with Kingfisher Airlines for the tag of India’s highest NPA (non-performing asset).

The Central Vigilance Commission referred the case to CBI for criminal investigation as evidence emerging raise suspicion that there was a criminal conspiracy to defraud Indian public sector banks of about Rs 6,500 crore and take most of the money out of the country or divert it to other projects.

The credit was given to three group companies — Rs 4,366 crore to Winsome Diamond & Jewelers, Rs 1,932 crore to Forever Precious Diamond and Jewellery and Rs 283 crore to Suraj Diamonds.

Starting March 2013, the group started having problems repaying the loans. The banks sent a notice to it as a wilful defaulter on October 15, 2013, and in recent months the loans have been declared as NPA.

Winsome promoter Jatin Mehta told the banks that his buyers of gold in UAE had defaulted on payments, making him unable to repay the loans. According to Mehta, the buyers suffered losses of $1 billion in derivatives and commodities trading. However the evidence raises questions about the oversight exercised by banks, customs department and regulatory bodies, especially those in the financial sector. However fresh details surfacing suggest that the group used to export gold jewellery and coins to 28 entities in Dubai and Middle East that were owned by Jatin Mehta and family.

Mehta’s Adani connection