Febrero 19, 2018

Par panel seeks report from Finance Ministry over PNB fraud

15 Febrero 2018, 08:23 | Dolorita Barahona

The high-end Nirav Modi brand has stores in several of the world's major citiesMore

The high-end Nirav Modi brand has stores in several of the world's major citiesMore

India's Enforcement Directorate Thursday raided several places following the detection of fraudulent transitions worth about 1.77 billion USA dollars at state-owned multinational banking and financial services company, Punjab National Bank (PNB).

He founded a diamond sourcing and trading company named Firestone (that was later renamed Firestar) in 1999.

To this, Punjab National Bank MD and CEO Sunil Mehta pointed out that the billionaire jeweller had written to the bank last week about a repayment plan.

Mehta said the fraud remained under investigation, but the bank would take responsibility where it should.

The stock had underperformed the market over the past 30 days till 14 February 2018, falling 11.93% compared with 1.77% fall in the Sensex. Bank of Baroda's share prices have also tanked 4.25%.

The federal police and the Enforcement Directorate, a government agency that fights financial crime, said they had begun investigations on Thursday, including into whether the fraud involved money laundering.

Numerous Indian media outlets have linked the scam to billionaire jeweler Nirav Modi. His current whereabouts are unknown.

The downfall is majorly due to the "fraudulent and unauthorized" transactions worth about $1.77bn detected at one of PNB's Mumbai branches.

But there are concerns the fraud could affect other banks, and hurt confidence in India's banking sector.

The letter of credit is a form of trust documents, and the loan is later recovered from the bank which issued these letters. "We finally filed two FIRs against him", Prasad said. "The scam was first detected by our officials at first in 2011 and we had reported it to the concerned agencies", he said.

"Members expressed their concern over such large scale fraud in the PNB and questioned the recapitalisation process of the state-run banks when they are not well managed and tax payers money is leaking", a member who was present in the meeting said. The bank said it is committed to clean and transparent banking.

Let us state that the country's government banks dealing with many problems already have to deal with the biggest scandal in history.

Indian bank shares slid further on Thursday, amid worries about who else had extended credit at the behest of PNB. Union Bank lent Rs 2,300 crore and Allahabad Bank lent Rs 2,000 crore, SBI gave Rs 960 crore, reports MoneyControl. The two banks did not respond to requests for comment.

The PNB has claimed in the complaint that overseas branch of banks used the funds to clear their own liabilities, the officials said. "It seems that based on the records of these transactions, some banks have given them loans overseas".

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