SBI has $200 million, Union Bank $300 million exposure to PNB’s LoUs
State-run lenders State Bank of India (SBI) and Union Bank of India said they had an exposure of at least $200 million each to the fraudulent transactions at Punjab National Bank (PNB) involving Nirav Modihelmed companies.
SBI said it had an exposure of $212 million to PNB with respect to the fraudulent transactions, but did not have any direct exposure to Modi.
“We don’t have any direct exposure to Nirav Modi, but we do have some exposure to PNB,” said SBI chairman Rajnish Kumar at a briefing in Kochi.
PNB on Wednesday said it had detected a ₹11,400-crore financial fraud as part of which billionaire jeweller Nirav Modi and his related firms acquired letters of undertaking (LoUs) from a Mumbai branch to obtain overseas credit from other lenders.
In its complaint to CBI on January 29, PNB had said it had issued LoUs to Hong Kong branches of Allahabad Bank and Axis Bank. SBI’s Kumar admitted the lender had some exposure to Gitanjali Gems, among the companies accused of fraud by PNB in its complaint to CBI.
“Our exposure to Gitanjali is small. We are not worried,” Kumar said. He added that loans extended to the gems and jewellery sector stood at less than 1% of SBI’s loan book of ₹16 lakh crore.
Separately, Union Bank sent a communication to exchanges on Friday saying its outstanding exposure to LoUs issued by PNB stood at $300 million.
It said its foreign branches had taken the exposures with PNB as counter-party risk via authenticated SWIFT messages. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication.