In­dian bank finds $1.8bn fraud at sin­gle branch

Kuwait Times - - Front Page -

MUM­BAI: In­dia’s sec­ond-largest staterun bank said yes­ter­day it had de­tected fraud of al­most $1.8 bil­lion at one of its branches, send­ing its shares plung­ing more than nine per­cent. The Pun­jab Na­tional Bank (PNB), one of sev­eral state-owned lenders the gov­ern­ment is try­ing to clean up, said trans­ac­tions worth $1.77 bil­lion had been made “for the ben­e­fit of a few se­lect ac­count hold­ers with their ap­par­ent con­nivance”.

It said they had oc­curred at a sin­gle branch in In­dia’s fi­nan­cial cap­i­tal Mum­bai. “Based on these trans­ac­tions other banks ap­pear to have ad­vanced money to these cus­tomers abroad,” the bank said, adding that the fraud had been re­ported to en­force­ment agen­cies for fur­ther in­ves­ti­ga­tion. The bank did not give any fur­ther details, or say which lenders were af­fected. It is un­clear whether the lat­est state­ment is re­lated to an ear­lier al­le­ga­tion that bil­lion­aire jew­eler Ni­rav Modi and others de­frauded the bank of more than $40 mil­lion.

Last week, the Cen­tral Bureau of In­ves­ti­ga­tion (CBI) said it was look­ing into al­le­ga­tions about Modi, one of the coun­try’s rich­est men. “Ear­lier this month, a first in­for­ma­tion re­port was lodged by PNB and we raided var­i­ous lo­ca­tions. In­ves­ti­ga­tions are still on­go­ing,” CBI spokesman Ab­hishek Dayal told AFP yes­ter­day. Modi is worth $1.73 bil­lion ac­cord­ing to Forbes, plac­ing him 85th on In­dia’s rich list. The 47-year-old is the founder of jew­ellery gi­ant Firestar Di­a­mond while his high-end Ni­rav Modi brand has stores in some of the world’s ma­jor cities. Re­quests for com­ment from Modi’s spokesman went unan­swered yes­ter­day.

Firestar Di­a­mond, one of his di­a­mond re­tail com­pa­nies, has pre­vi­ously said the ear­lier case was not con­nected to the com­pany. Shares in PNB plum­meted 9.22 per­cent on the Bom­bay Stock Ex­change’s bench­mark Sen­sex in­dex in early af­ter­noon trade fol­low­ing the bank’s an­nounce­ment. Bloomberg News re­ported that the value of the il­le­gal trans­ac­tions amounted to eight times the bank’s net in­come last year. In­dia’s gov­ern­ment is try­ing to re­duce the crip­pling debts of the coun­try’s trou­bled lenders. It re­cently an­nounced a $32-bil­lion re­cap­i­tal­iza­tion plan for state-owned banks to help them clean up their books.


MUM­BAI: A man walks out of a branch of state-owned Pun­jab Na­tional Bank yes­ter­day.

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