DUBAI: A Dubai-based gold and jewellery retailer has defaulted on loans worth about 500 million dirhams ($136.2 million), with banks considering options including legal action to retrieve the money, four banking and trade sources told Reuters.
The non-payment by Atlas Jewellery, which has more than 50 branches across the Gulf and in India, affects at least 15 banks, the sources said on condition of anonymity because the information isn’t public.
It was not clear why Atlas Jewellery had failed to honour its debts. Company officials declined to comment and Reuters was unable to contact the company’s owner, M.M. Ramachandran.
Dubai police said the Indian national and his daughter had been arrested in cases relating to suspected bounced cheques.
Dubai has in recent years joined the likes of London, New York and Hong Kong as a major gold trading centre thanks to its proximity to the world’s largest gold consumer, India, and an aggressive drive to become a regional commodities hub.
This is the second scandal involving Dubai jewellery businesses since the city’s rise to prominence as a significant gold trading centre. In March 2010 the Dubai Financial Services Authority sanctioned three brothers behind Damas International over unauthorised withdrawals from the company of 1.94 kg of gold and cash worth about 365 million dirhams.
The sources said that banks affected by the Atlas allegations — mostly local lenders but also including at least two Indian banks – met last week to discuss the matter, with some banks pushing for a hard line but others willing to write off the debt.
