The CBI has registered a case of alleged fraud of Rs 824 crore against Chennai-based Kanishk Gold Pvt Ltd involving loans taken from an SBI-led consortium of 14 banks.

The CBI carried out searches at the official and residential premises of promoters of Kanishk Gold Pvt Ltd on Wednesday as it launched investigations in the Rs 824 crore loan fraud case, the officials said. The case has been registered by the Central Bureau of Investigation (CBI) on a complaint from the SBI on behalf of the 14-bank consortium.

Kanishk Gold Pvt Ltd and its directors allegedly diverted the funds detrimental to the rights and interests of the bank, the complaint states. The SBI has requested the agency to register a case against Kanishk Gold Pvt Ltd, its promoter director Bhoopesh Kumar Jain and others. The company's account was declared fraud and non-performing asset (NPA) in 2017-18 by various lending banks, it alleged.

The company manufactures gold jewellery which was marketed under the brand name 'Krizz'. It marketed its products through distributors till 2014 but changed its business model to B2B (business-to-business) in 2015 when it switched to supplying to large retail jewellers, the SBI said in its complaint to the CBI.

The loan accounts of the company were taken over by the SBI from the ICICI in 2008. Its banking arrangement was converted into a multiple banking arrangement in March 2011, it said.

The SBI alleged that while the fraud is to the tune of Rs 824.15 crore, the security available with the it to cover the loss is only around Rs 156.65 crore. The CBI officials said they have received the complaint and were in touch with the bank because of certain loopholes in the complaint which were to be rectified by the bank.

The bank has alleged that the company had misrepresented and falsified the records and financial statements of the company to show to dress up its financial picture since 2009 in order to avail credit facilities from it. The new bank fraud in the jewellery sector has come to light when the Rs 13,600 crore PNB fraud committed by Nirav Modi and his uncle Mehul Choksi have already rocked the industry and turned bankers cautious.

Senior bank officials have themselves come under suspicion for collusion with fraudsters, especially in the case of large loans which should not have gone undetected. Some top PNB officials have been arrested in the Nirav Modi scam and even the CMD of the bank was questioned in connection with the case. These large bank frauds have wider repercussions for the banking system as well as the economy.

The country's economic growth can be hit as banks that run into financial trouble cannot extend loans to productive sectors. Investment bank Goldman Sachs downgraded its forecasts for India's economy on Tuesday in the wake of a more than $2 billion fraud at Punjab National Bank'' warning it could spark tighter regulation of the banking sector that would constrain credit growth.

In a note to clients'' Goldman Sachs lowered its real gross domestic product (GDP) forecast on India for the year to March 2019 to 7.6 percent from 8 percent earlier. Last month's disclosure of the fraud by PNB'' India's second-largest state-run lender has sent bank shares tumbling in the stock markets.