A sophisticated fraud network in Karnataka duped nationalised and cooperative banks of roughly ₹27‑28 lakh by pledging counterfeit gold ornaments. The scheme relied on fake hallmarks and banks’ reliance on simple acid tests.
Key Takeaways
- The ring‑fence fraud net secured loans worth ₹27‑28 lakh using 419 g of fake gold
- Banks relied only on acid tests, allowing the deception to go undetected
- Karnataka police arrested multiple suspects and dismantled the operation
The Karnataka police have uncovered a large‑scale gold‑loan fraud that siphoned off close to ₹27‑28 lakh from nationalised and cooperative banks. The operation hinged on presenting gold ornaments that were merely coated with a thin layer of gold and bearing counterfeit hallmark stamps. The police in Shivamogga arrested the primary conspirators – B J Lokesh, 39, and H Sudha, 35 – while a manhunt continues for additional accomplices.
Modus Operandi of the Scam
According to Superintendent of Police Nikhil B, the gang pledged ornaments weighing a total of 419 grams, claiming them to be genuine gold. In reality, the pieces were only 10 % gold‑plated, and the fake hallmarks gave them an appearance of authenticity at first glance. Because the banks involved performed only the traditional acid test, which does not reveal the exact gold content, the fraud remained hidden until a machine‑based assay was later conducted during an auction.
Police Action and Arrests
The investigation began after a manager at Punjab National Bank filed a complaint alleging that borrowers had pledged gold ornaments and secured loans. Further probing revealed that the accused deliberately targeted banks that relied solely on acid testing. The police also identified S Y Ravishankar, a gold appraiser at Punjab National Bank, along with Rahul, 26, and Sharath, 35, who operated a jewellery store and facilitated the movement of the counterfeit items from Chandigarh.
Implications for the Banking Sector
This case underscores a critical vulnerability in loan‑disbursement protocols. Experts warn that banks must upgrade their verification processes, employing advanced spectrometric equipment and stricter hallmark authentication to prevent similar scams. The incident also raises questions about the oversight of cooperative societies that often lack robust compliance mechanisms.
Legal Proceedings and Future Outlook
Doddapete police have formally registered the case, seized the forged ornaments, and are preparing to prosecute the accused under economic fraud statutes. The courts are likely to impose severe penalties, given the premeditated nature of the scheme and the financial loss inflicted on multiple banking institutions.
