PNB fraud put at close to $2 billion

NEWDELHI: THE BANK SAID IT HAS NOT RECEIVED ANY INSTRUCTION FROM THE GOVT TO COMPENSATE OTHER LENDERS

FOR LOSSES ARISING OUT OF THE FRAUD

Punjab National Bank (PNB) has said that the alleged fraud perpetrated by jewellers Nirav Modi and Mehul Choksi may be around $2 billion, over $204 million more than previously estimated.

In a late Monday night filing to stock exchanges, the state-owned lender said that “the quantum of reported unauthorised transactions can increase by $204.25 million.” The bank had earlier put the defrauded amount at ₹11,394.02 crore ($1.77 billion). Adding another ₹1,323 crore would take this to ₹12,717 crore.

PNB said it has not received any instruction from the government to compensate other lenders for losses arising out of the fraud. The jewellers and companies linked to them had allegedly colluded with PNB officers to obtain fake bank guarantees to get loan from overseas branches of Indian banks including Allahabad Bank, Axis Bank and UCO Bank.

The bank has enough capital/ assets to pay for such liability in case of eventuality in accordance of law, the second largest lender in the country said in a separate statement to stock exchange made on Monday night. In filings earlier this month, PNB said it stumbled upon the scam on January 25, 2018, and a fraud report was filed with the Reserve Bank of India on January 29.

On that day, a criminal complaint for registration of FIR was also made with the CBI. Stock exchanges were informed of the fraud on February 5. This was followed by another fraud report being submitted to the RBI on February 7, the day one more complaint was filed with the CBI.

On February 13, an FIR was filed with the CBI against Nirav Modi Group, Gitanjali Group and Chandri Paper & Allied Products Pvt Ltd, as also a complaint filed with Enforcement Directorate. Stock exchanges were informed the next day, PNB had said in the filings.

In the complaint, PNB alleges that Modi and companies linked to him colluded with some of its officers including a former deputy general manager Gokulnath Shetty, who was posted in the foreign-exchange department of its Mumbai branch.

They fraudulently acquired guarantees to obtain loans from the overseas branches of Indian banks, claiming to need the cash to import pearls.