Karnataka Bank Ltd informed the Reserve Bank of India (RBI) that Gitanjali Gems, owned by Mehul Choksi, had committed a Rs. 86.5 crore fraud in the fund-based working capital.

A statement by the bank said, “We have reported a fraud to the RBI amounting to Rs. 86.47 crore in the fund-based working capital facilities extended to Gitanjali Gems Ltd on account of non-realisation of export bills and diversion of funds.”

The scheduled commercial bank clarified it does not have any Letter of Understanding (LoU) exposure in Mehul Choksi's company.

The bank's Company Secretary Prasanna Patil said, “The working capital facilities were extended by the bank under consortium arrangement and provisions will be made as per the RBI guidelines.”