More fraud at India’s PNB
mumbai/new delhi — India’s Punjab National Bank (PNB) has uncovered another credit-guarantee fraud within the Mumbai branch at the centre of a similar scam worth over $2 billion, according to a complaint filed with the federal police.
The alleged embezzlement of around ₹91 million ($1.4 million) involved executives of a company called Chandri Paper and Allied Products, according to the complaint filed by PNB with the Central Bureau of Investigation.
The newly-uncovered scam raises fresh doubts about whether more such cases involving fraudulent guarantees lurk on the books of PNB, the second-biggest state-run lender, or other government-owned Indian banks. The new case came to light after India’s central bank ordered all state-run lenders to provide it with details of all letters of undertaking — a form of credit guarantee used to orchestrate the alleged $2 billion fraud — issued by them in the past several years.
Separately, top executives from state-run lenders, including market leader State Bank of India, sought to reassure investors and vowed to strengthen systems and practices at the banks that account for twothirds of India’s banking assets. Each bank has already scanned their credit-guarantee transactions involving letters of undertaking and found all to be genuine except those already reported, the group of bankers told a news conference in New Delhi.
The bankers’ comments come a day after a strongly-worded speech by the Indian central bank chief Urjit Patel, who said the Reserve Bank of India did not have enough authority over the governmentowned banks, which are also regulated by the government.
In the latest case that came to light, PNB told the CBI that two officials at its Brady House branch in Mumbai “entered into a criminal conspiracy” with directors of Chandri Paper in April 2017 to fraudulently issue two letter of undertaking for the company to raise the money.
According to the complaint, the same set of bank officials were allegedly involved in the cases involving both the jewellers and Chandri Paper.