Karnataka Bank declares Rs 108 crore loan to Sintex Industries as fraud

The bank on Friday (9 October) declared its exposure of Rs 107.99 crore to Sintex Industries (SIL) as fraud.

In 2016, SIL had availed various credit facilities under consortium arrangement wherein, Karnataka Bank was one of the fifteen member banks. Karnataka Bank's total exposure in the arrangement stood at around 1.74%.

Some of the member banks have reported to the Reserve Bank of India (RBI) regarding fraud in the borrowing account. Accordingly, Karnataka Bank has reported to RBI a fraud amounting to Rs 107.99 crore in the credit facilities extended earlier to SIL on account of diversion of funds.

"During August 2019, the borrowing account was classified as a non-performing asset and has been fully provided for and as such, no impact on the financials of the Bank going forward," the bank said in a statement.

The media reported that public sector banks face a hit of close to Rs 6,000 crore on account of their exposure to SIL which has been classified as a fraud by Punjab National Bank (PNB).

Earlier, PNB reported a borrowal fraud of Rs 1203.26 crore in non-performing assets (NPA) account of SIL at Large Corporate Branch at Ahmedabad.

Gujarat-based Sintex Industries is a textile company. Its textiles division specializes in men's structured shirting for the premium fashion industry.

Karnataka Bank is a scheduled commercial bank having a network of 848 branches and 1,026 ATMs across India as on 31 March 2020.

Shares of Karnataka Bank rose 2.33% at Rs 41.8 on Friday.

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