March 24, 2018

Parliamentary panel seeks report from FinMin over PNB fraud

15 February 2018, 08:53 | Taylor George

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The Congress said, "What the Modi Government has not told us is that there is also an exposure of Rs.9,872 crore of various banks with Gitanjali Gems Limited, a company promoted by Shri Mehul Choksi". "We are in the recovery mode and looking to protect the financial interest of all lenders", he said.

The state-owned bank said it had detected Dollars 1.77 billion fraud in which billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from one its branches for overseas credit from other Indian lenders. We have brought it under the notice of regulatory and law enforcement agencies as soon as we came to know about it.

Security personnel's stand guard at the entrance to the property of Nirav Modi where an ED raid is underway at Def Col in New Delhi on Thursday. The bank has claimed in three complaints to the CBI that so far it has detected 150 LoUs which were fraudulently issued by its officials in connivance with Nirav Modi and the other accused in the case, officials said. The 47-year-old is the founder of a brand after his name, owned by the firm Firestar Diamond, a $2.3 billion jewellery company.

The PNB chief said the fraud was detected on Jan 25 and was reported to the investigative agencies, including the CBI on Jan 29.

Given the scale of the fraud, the fallout from the case could spread and give rise to fresh questions about lending procedures at Indian lenders, particularly public sector banks, mired in soured debt.

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He, however said the bank will honour all its bonafide commitments.

The Congress also targeted Prime Minister Modi for allowing Nirav Modi to be part of the Indian business delegation at Davos. Meanwhile, shares of PNB Housing Finance settled for the day at Rs 1199.00, down 4.30% on the BSE. The steep fall has wiped tens of billions of rupees off PNB's market value. An official then used SWIFT to convey acceptance of bills for the full amount to the overseas bank.

He said he had received a "vague email" from the customers involved in the fraudulent transaction about settling the dues and the bank had asked them to send their detailed response. It was reported by Times of India that according to investigations which took place initially, Allahabad Bank, Union Bank, and Axis Bank had funded around ₹7,000 Crore on the strength of the letters of undertaking (LoUs), giving the largest exposure to the Allahabad Bank. It is understood that the ED also went through the PNB complaint that was made out against Modi and others.

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All India Bank Employees Association leader Devidas Ramchandra Tuljapurkar said that there was clear complicity by the entire system in this fraud.

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