CBI grills 2 SBI officers in PNB fraud case

Two deputy general manager-level officers of State Bank of India posted in Frankfurt in Germany and Mauritius are being questioned today by the CBI in connection with the $2 billion scam in PNB allegedly involving billionaire jewellers Nirav Modi and Mehul Choksi, officials said.

They said the agency is focusing on the execution of Letters of Undertaking (LoUs) fraudulently issued by PNB's Brady House branch in favour of foreign branches of Indian banks.

According to the RBI guidelines, LoUs in gems and jewellery sector should have a validity of 90 days but this crucial factor was conveniently ignored by PNB in issuing such guarantees to the companies of Modi and Choksi.

For outstanding buyer's credit, the LoUs are established for about 360 days ab-initio, PNB has alleged.

"This should have evoked suspicion in the minds of overseas branches of Indian banks extending buyers' credit. These branches never raised any alarm on violation of RBI guidelines and continued to provide funding against fraudulent LoUs," it has alleged.

During the questioning of officials of Indian banks posted abroad, CBI asked these crucial questions. The officials were asked why several discrepancies in the LoUs issued by PNB were not considered by the banks extending credit facilities to the companies of Modi and Choksi without raising alarms.