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Karnataka Bank reports Rs 285 crore fraud by DHFL, Religare Finvest and two others

Similarly, Religare Finvest Ltd (RFL) was dealing with the bank since 2014, availing various credit facilities.

SNS | New Delhi |

Private lender Karnataka Bank on Saturday said it has reported to the RBI a fraud of over Rs 285 crore consequent to loans gone bad to four entities.

“A total of Rs 285.52 crore has been reported as fraud wherein the bank was one of the consortium lenders during 2009 to 2014 to DHFL, Religare Finvest, Fedders Electric and Engineering Ltd and Leel Electricals Ltd,” Karnataka Bank said in a regulatory filing on Friday.

The four defaulted entities, DHFL, Religare Finvest, Fedders Electric and Engineering Ltd, and Leel Electricals Ltd owe Rs 180.13 crore, Rs 43.44 crore, Rs 41.30 crore and Rs 20.65 crore respectively to the private lender.

“DHFL (defaulted entity) dealing with us since 2014 had availed various credit facilities under consortium arrangement wherein, we were one of the member banks. In view of Early Warning Signals (EWS) in the conduct of the account and other developments, the account was red flagged on November 11, 2019.”

“The borrowing account was classified as Non-Performing Asset on October 30, 2019 and now, for misappropriation & criminal breach of trust & diversion of funds in the credit facilities extended earlier to the company, a fraud amounting Rs 180.13 crore has been reported to RBI,” Karnataka Bank said.

Similarly, Religare Finvest Ltd (RFL) was dealing with the bank since 2014, availing various credit facilities.

Following classification of this account as non-performing in October 2019 by a consortium member, Karnataka Bank reported to RBI a fraud amounting to Rs 43.44 crore in the credit facilities extended earlier, on account of diversion of funds.

Leel Electricals was classified as NPA account in March 2019 and it reported to RBI a fraud amounting to Rs 20.65 crore in the credit facilities to the company on account of diversion of funds.

“In all the referred three non-performing accounts, necessary provisions have been made in full to be spread across four quarters,” it said.

Fedders Electric and Engineering Limited was reported as NPA in July 2018 by a member bank in consortium, subsequent to which Karnataka Bank reported fraud of Rs 41.30 crore on account of fund diversion.

The account has already been fully provided for, it added.