Indian banks might take a hit of millions from PNB fraud| MENAFN.COM

Monday, 05 December 2022 04:11 GMT

Indian banks might take a hit of millions from PNB fraud

(MENAFN) Indian banks are likely to take a hit of over USD3 billion from loans and corporate guarantees provided to diamond companies in the middle of a huge alleged fraud at the state-run Punjab National Bank.

As of 2017, banks had extended loans and guarantees worth 176.32 billion rupees to companies tied to billionaire Nirav Modi and his uncle Mehul Choksi, as they would have increased over the past year and the total "hit" to Indian banks "may well exceed" USD3 billion.

The complaint by PNB said the biggest fraud in Indian banking history involved two junior officials at a Mumbai bank branch issuing "letters of undertaking" to firms linked to Modi and Choksi for them to obtain credit from overseas branches of other Indian lenders.

None of these letters of undertaking were recorded on the bank's internal software system, but were transmitted through the SWIFT interbank messaging system, "thus avoiding early detection of fraudulent activity."

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