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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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