SBI hopes to get its dues back

State Bank of India (SBI) Chairman Rajnish Kumar on Monday said he expected Punjab National Bank (PNB) to clear the bank’s ~13.6 billion dues in the Nirav Modi case.

“I am confident that things will be sorted between PNB and other banks,” Kumar said in an interview to a TV channel.

“As far as our exposure in PNB is concerned, that number is confirmed, calculated and advised to PNB,” he added.

He said the exposure of SBI to Gitanjali Gems — one of the companies involved in the scam — has also been crystallised.

“Our claim is clear because there are some secondary market purchases, so double counting has to be avoided,” Kumar said.

When asked if the banking sector would see more skeletons tumbling out of the closet, Kumar said it looked like the case was confined to a particular PNB branch.

“At least for SBI, I can confirm that there is no such issue. And, I am sure that by other banks would have also reviewed their portfolios and would have arrived at a similar conclusion because if something was wrong somewhere, by now, I presume, it could have come out,” Kumar said.

When asked if the Reserve Bank of India (RBI) had issued any other instructions to banks, other than integrating the core banking solution with the SWIFT system, Kumar said he had no knowledge on the issue.

He said the RBI had instructed the banks to put in place a safety mechanism with respect to global money transfer software SWIFT and the banks were in a position to comply with that by April.

I AM CONFIDENT THAT THINGS WILL BE SORTED BETWEEN PNB AND OTHER BANKS. AS FAR AS OUR EXPOSURE IN PNB IS CONCERNED, THAT NUMBER IS CONFIRMED, CALCULATED AND ADVISED TO PNB” RAJNISH KUMAR, chairman, SBI

Kumar also said the PNB case was more of operational risk and not related to credit risk. “Whatever has gone wrong, it is about the operational weakness and we have to keep that segregated from the credit risk,” he said

Other than SBI, lenders such as Union Bank of India (UBI) and Allahabad Bank also have exposure to PNB. Allahabad Bank has an exposure of about $366.87 million through its overseas branch in Hong Kong, while UBI has exposure of nearly $300 million through its foreign branches.