CommentsClose X Mumbai: In what can impact the exim trade the Rs 12 700-crore Nirav Modi fraud at Punjab National Bank has affected trade finance activities as lenders have become extra cautious while the premium on Indian paper has shot up by 10-50 bps say bankers. The PNB fraud has already affected trade financing. No bank is now prepared to extend letters of understanding (LoUs). The ability of a company to raise money through LoUs from abroad has been affected badly a senior official from a state-run bank has told PTI.A private sector banker closely associated with the activity echoed the same saying lenders have taken a cautious approach in the aftermath of the largest financial fraud in the history of the nation.Despite the immediate setback bankers however feel that there will not be a complete freeze so that a genuine businessman s operations are affected.The fraud unearthed at the Brady House branch of PNB had diamontiare Nirav Modi and his various company officials colluding with senior officials of the state-run lender wherein LoUs were issued without proper checks and securities.The fraud went undetected for many years as the SWIFT the financial transaction messaging system was not linked to PNB s core banking system. As a result of this the issues LoUs were not shown in the bank s books.An LoU is a guarantee by a bank to pay another lender for import by companies and is considered very crucial for cross-border trade which helps the importer access funds at lower costs.Meanwhile bankers said the cost of funds for domestic exporters/importers has gone up considerably following the scam as for the LoUs already issued a risk premium has already been set in for any Indian paper.While one private sector banker said the trade is availing of the same LoU-based short-term loans are coming in at a premium of 10-30 basis points another private banker said in some cases it has gone up to even 50 bps.One of the two bankers cited above said calls are being made to the issuer bank for re-confirming the genuineness even though it is not supposed to be done because an LoU is generally taken at face value. Historically there has been no default on buyer s credit as it is guaranteed by another bank and so we take it as 100 per cent safe business. This is for the first time that we saw a problem. We are building some mechanisms to strengthen it Union Bank of India managing director and chief executive Rajkiran Rai G told PTI. In the Nirav Modi case our people got carried away by the PNB guarantee and they took that risk. Now we are taking care of that and even though it is a guarantee from government-run bank we ll evaluate counter-parties. We are putting certain limits in place so that in future such things do not happen again Rai added.The scam came to light only on February 14 has also dented the country s profile at the world stage said some other bankers who spoke off-the-record adding the delay in finding a resolution will further dent the image. If PNB does not honour the commitment of paying up as newer LoUs mature it will affect the country us a lot as it may not be only Indian lenders which will be having exposures to Modi s firms through PNB issued LoUs said another bankr.Although PNB managing director and chief executive Sunil Mehta had said the bank would honour all bonafide commitments under the LoUs there are reports about some disputes between PNB and other lenders on repayment.Bankers say more than the interest income they look at trade finance as a source of fee income. This results in many banks using a vibrant secondary market to pass on their dollar exposure to other lenders including foreign ones too. This is a business that we cannot stop. In foreign branches 60-70 per cent business happens through letters of credit buyer s credit and bill discounting. We are not slowing down but checks will be tougher Rai said.It can be noted that as of now Modi has already defaulted on loans of over Rs 280 crore but more loans will be coming up for repayment as months pass by.Another state-run banker said demand for LoUs has also come down following the scam. It s not the time that companies will choose to raise money through LoUs. They will wait for sometime till the Modi issue settles down the official said.Lenders have also begun a process to improve their own practices so that a similar incident does not reoccur say another banker.Rai said UBI has improved monitoring mechanisms at its foreign branches and has also mandated a monthly training module to the staff and will be careful about the quality of staff being sent on overseas assignments from now on.(Except for the headline this story has not been edited by NDTV staff and is published from a syndicated feed.)
The CBI today examined Punjab National Bank s Managing Director and CEO Sunil Mehta and its Executive Director K V Brahmaji Rao in connection with the Rs 11 400 crore PNB scam allegedly involving diamantaire Nirav Modi and owner of Gitanjali Gems Mehul Choksi officials said. They said the examination is focussed on understanding how the crime was detected by the bank and other procedural issues and their violations. They are not being treated as accused the officials said. It has been alleged that fraudulent guarantees were issued to the uncle-nephew duo of Nirav Modi and Mehul Choksi through 293 Letters of Undertakings. Refusing to give out any further details the officials said the agency is also questioning the 12 accused arrested by the agency so far. They said this is the first time the agency has examined the top brass of the Punjab National Bank in connection with the fraud which remained undetected state for over six years shaking up the banking system of the country. According to the website of the PNB Rao is in-charge of the integrated risk management division credit (operations) monitoring of accounts with exposure of above Rs 50 crores including stock audit and Portfolio Management Service (PMS) industrial rehabilitation and action taken on borrowal frauds reported from Mumbai where the alleged fraud took place. Rao started his banking career in Vijaya Bank in the year 1982 as a Probationary Officer it said. Mehta started his banking career as an agriculture field officer at the Allahabad Bank in 1982. The CBI has so far arrested 12 accused in the case. Vipul Ambani president (finance) of Fire Star Diamond executive assistant Kavita Mankikar and senior executive Arjun Patil (all from Nirav Modi s companies) were arrested on Tuesday. Kapil Khandelwal CFO of Nakshatra group and Gitanjali group and Niten Shahi manager of Gitanjali group were also arrested by the agency the same day. An authorised signatory of Nirav Modi s company was also arrested. From the PNB the agency had arrested Rajesh Jindal a general manager retired official Gokulnath Shetty and Single Window Operator Manoj Kharat besides three other officials -- Bechhu Tiwari Yashwant Joshi and Praful Sawant. Shetty and Kharat allegedly sent messages of the LoUs using an international messaging system for banking systems called SWIFT (Society for Worldwide Interbank Financial Telecommunication) which is used to pass instructions among banks globally to transfer funds but did not make entries in the bank s system to avoid detection. Based on these instructions and guarantees funds were released by overseas branches of Indian banks. It is alleged that Rs 11 400 crore of LoUs were fraudulently issued to the firms of Nirav Modi and Choksi.
The Budget Session of Parliament which resumes on Monday after a month-long recess is likely to begin on a stormy note the Opposition is all set to target the government over the Rs 12 700 crore Punjab National Bank scam. The first half of the session was marked by frequent adjournments in both the Lok Sabha and Rajya Sabha as Telugu Desam Party leaders from Andhra Pradesh maintained a continuous protest against the government for allotting little to the state in the Budget. They demanded a special package for their state. Five days after the Budget Session was adjourned on February 9 the Punjab National Bank informed the Bombay Stock Exchange that it had detected fraudulent and unauthorised transactions amounting to Rs 11 380 crore at its Brady House branch in South Mumbai. It later said the amount could be Rs 1 323 crore higher.When the Parliament session resumes on Monday Opposition parties are likely to corner the Narendra Modi government over the multi-crore bank fraud. Congress Deputy Leader in the Rajya Sabha Anand Sharma has submitted a notice for a discussion on the alleged scam bank fraud PTI reported. We will demand answers from the government Sharma told PTI. We will also demand answers from Prime Minister Narendra Modi as the scam happened right under his watch. Sharma said the Congress will also highlight the BJP-led government s selective vendetta to target political opponents a reference to the arrest of Karti Chidambaram the son of former Finance Minister and Congress leader P Chidambaram in the INX Media case.Communist Party of India leader D Raja said his party will bring up the PNB fraud bur also discuss the new bills the government proposes to introduce in Parliament. We will demand answers...The banking sector is in deep crisis and its credibility is at stake he told PTI. Trinamool Congress leader Derek O Brien said his party will coordinate with other Opposition parties to expose this BJP government that has not delivered on its promises . The government however is hoping to counter the Opposition with its Fugitive Economic Offenders Bill which once passed will give it the power to attach the assets of offenders declared fugitives. Among the other bills the government has listed are the Payment of Gratuity (Amendment) Bill Specific Relief (Amendment) Bill and the Dentists (Amendment) Bill in the Lok Sabha. In the Rajya Sabha the government has listed the Motor Vehicles (Amendment) Bill and the State Banks (Repeal and Amendment) Bill. The Centre also is likely to push to have the triple talaq bill passed.
New Delhi: The second part of Parliament s Budget Session is likely to begin on a stormy note with the Congress and other opposition parties set to raise the issue of multi-crore financial scams involving public-sector banks in both the Houses.The Lok Sabha and Rajya Sabha will meet today after a month-long recess in the session.Opposition parties would seek answers from Prime Minister Narendra Modi on how the multi-crore Punjab National Bank (PNB) fraud and other banking scams took place under his watch and how the government failed to stop them.The government on its part is seeking to counter the opposition s offensive by bringing the Fugitive Economic Offenders Bill.The legislation once passed will grant powers to the government to attach assets of persons declared fugitive. This will include benami assets too.While the opposition has not planned any joint strategy so far it is likely to meet in a day or two to chalk out a plan for the Parliament session.Sources said that while the financial sector and banking scams would dominate the proceedings in both Houses issues related to crime against Dalits and women farmers the economy and unemployment would also be raised by the opposition benches.The Congress will also raise the issue of vendatta at the hands of the BJP-led government aimed at targeting its political opponents.This comes in the wake of the CBI arresting Karti Chidambaram the son of former Union finance minister and Congress leader P Chidambaram in connection with the INX Media case.He is currently in custody of the probe agency for five days till March 6.The second part of the session would primarily see discussions on the demand for grants for various ministries.The opposition would also press for a debate on a number of contentious matters and important issues confronting the country.The government has listed a few bills for consideration and passage in both Houses.In the Lok Sabha it intends to bring The Payment of Gratuity (Amendment) Bill 2017 and The Specific Relief (Amendment) Bill 2017 today and The Dentists (Amendment) Bill 2017 on Tuesday.In the Rajya Sabha the government has listed The Motor Vehicles (Amendment) Bill 2017 and The State Banks (Repeal and Amendment) Bill 2017 for the first day of the session.The government also is likely to press for the passage of a bill to ban instant triple talaq.Congress leaders said that they would soon be holding a meeting with other opposition parties to chalk out a joint strategy for the session.The aim is to corner the government unitedly and demand answers from it on various issues which it has evaded in the past a leader from the party said.Congress deputy leader in the Rajya Sabha Anand Sharma has given a notice for a discussion under Rule 267 of the House on the bank fraud issue. We will demand answers from the government on the bank fraud scam. We will also demand answers from Prime Minister Narendra Modi as the scam happened right under his watch he said.Mr Sharma said the party is also set to raise the issue of selective vendatta at the hands of investigative agencies by the BJP-led government to target key political opponents.CPI leader D Raja said the issue of PNB fraud will be taken up and the new bills that the government proposes to bring would also be discussed. We will demand answers from the government on how the fraud happened. The banking sector is in a deep crisis and its credibility is under stake he told PTI.Raja also said that issues pertaining to atrocities and crimes against Dalits and women would also be taken up.The Left leader claimed that such crimes were on the rise.He however said the financial crimes would be the highlight of the session.TMC leader Derek O Brien said his party is for a debate and a discussion in Parliament and would evolve a joint opposition strategy soon. We will coordinate with other opposition parties to expose this BJP government that has not delivered on their promises. I don t want to name any particular issue as there are many. We have issues for every day in Parliament he said.Mr O Brien also claimed that the BJP had gone overboard with its victory in Tripura. If you look at the bypoll results of Madhya Pradesh Rajasthan and Odisha it is very clear that their tally will come down he said. CommentsClose X The TMC leader claimed that Prime Minister Modi will not deliver his address from the Red Fort in 2019. If their target is West Bengal out target is Red Fort. BJP did not win Tripura the Left surrendered it he said.
.story-content span .story-content p .story-content div color:#000!important;font-family: open sans Arial!important;font-size:15px!important ALSO READ PNB fraud: Rs 45 billion in LoU scam diverted to Choksi firms says CBI PNB scam: Won t tolerate irregularities in financial sector says PM Modi Before PNB fraud: Nirav Modi Choksi left 18 businessmen 24 firms bankrupt PNB fraud: Nirav Modi s art collection seized Rs 114-billion PNB scam: Govt weighs bank s recapitalisation hike span.p-content div id = div-gpt line-height:0;font-size:0 A report published in Business Standard (Probe finds staff collusion systemic failure at PNB) had wrongly mentioned that Punjab National Bank Managing Director and CEO Sunil Mehta came to know about the letters of undertaking fraud on January 3. The correct date is January 23 2018. The error is regretted. Punjab National Bank s (PNB s) managing director and chief executive Sunil Mehta admitted the collusion of employees in the letters of undertaking (LoUs) scam while being questioned by the Enforcement Directorate (ED) on Thursday according to sources. Mehta s statement was recorded by the probe agency under the Prevention of Money Laundering Act in connection with the case registered against Nirav Modi and Mehul Choksi in the Rs 127-billion fraud at the government-owned lender. Mehta was in the ED office at Ballard Pier here for nearly six hours. He was summoned soon after being questioned in the same matter by the Central Bureau of Investigation (CBI). ALSO READ: Home car loans to get expensive as SBI ICICI PNB Axis Bank hike rates According to ED sources he said the fraud took place due to systemic failure and procedural lapses owing to lack of interface or proper links between the core banking software and the SWIFT interbank messaging system. ED officers questioned Mehta on procedural aspects of the banking system and whether he was aware about the malicious use of the SWIFT infrastructure. Also to explain the inefficiency of the system in not generating alerts despite LoUs getting encashed at regular intervals. The ED underlined its present focus was on operational issues at the bank not the criminal aspect. Top bankers were called to gather information about the rationale of the issues. We would decide further action depending on the outcomes said an ED official. ALSO READ: PNB is not shown as creditor in US bankruptcy filing by Nirav Modi s firms Messages sent to PNB officials remained unanswered. The ED is also said to have cited Reserve Bank of India (RBI) cautionary notes and alerts on SWIFT misuse issued to banks since August 2016. Their sleuths asked PNB why it did not act on those or if the alerts did not come under its lens. Mehta who took charge in 2017 reiterated he had no clue about the external and internal factors which had contributed to the fraud. He reportedly said he came to know about the mega fraud only on January 23. Two employees did unauthorised transactions the bank began an internal inquiry and registered a complaint with the CBI on January 29. So far the biggest fraud in Indian banking in size two junior employees at its Mumbai branch are accused of colluding with Modi and Choksi to issue unauthorised LoUs. Which were eventually used by the Modi and Choksi companies to get credit from foreign branches mostly of Indian banks. PNB itself has stated the fraud was on since 2011 and remained undetected as the employees did not enter the transactions into its Core Banking System after sending instructions to banks abroad by using SWIFT. The ED has asked Mehta to corroborate the details in his statement with supporting documents said the source. Their officers indicated he could be asked to come again if they required more information. It seems (PNB) had not fully implemented all the measures required to prevent potential misuse of SWIFT said the ED official cited above. The sources also said the ED was waiting to question PNB s retired deputy manager Gokulnath Shetty among the prime accused and now in custody. The agency believes Shetty s statement would be crucial in the matter. Other top executives could be called after the CBI questioning which is on. On Thursday the CBI had arrested a retired chief auditor of PNB responsible for concurrent audit between 2011 and 2015 at its Brady House Mumbai branch where the LoUs were issued. CBI sought his custody from court as he was apparently responsible for auditing the procedures and practices followed during the period. Read our full coverage on Nirav Modi scam at PNB
span.p-content div id = div-gpt line-height:0;font-size:0 A youth allegedly committed suicide in Bihar s Supaul district on Thursday after he was refused a loan for his plastic factory by Punjab National Bank police said. ALSO READ: EMIs set to rise as SBI PNB raise lending rates Sanjay Mandal was said to be depressed after his loan application was rejected by officials of the PNB branch at Basbitti Road in Supaul. District police official Vidhassgar said police has begun an investigation from all angles. ALSO READ: PNB fraud: Gitanjali Gems tanks 5% as ED attaches Rs 12 bn assets of Choksi Sanjay s neighbours told police he had repeatedly approached the PNB for the loan for his factory in his native village.
New Delhi: PNB MD and CEO Sunil Mehta got chastised from unexpected quarters when a globally acclaimed doctor V Shanta censured him for using the word cancer to describe the Rs 12 717 crore fraud at http://www.authorstream.com/kfckk/ the bank by billionaire jeweller Nirav Modi and his associates. Corruption is something to be ashamed of cancer is not she said. ... do not try to find parallels where none exist. Do not mix cancer with corruption. Ever. said the Ramon Magsaysay Award winner and cancer specialist in a letter to Mehta. Punjab National Bank. AFP. While addressing a press conference in connection with the 2 billion scam earlier in the month the Punjab Nation Bank chief had said: This cancer that s been going on since 2011 we have brought it out and we are resolving it. Strongly objecting to the use of the word cancer the legendary cancer specialist who was awarded Padma Bhushan in 2006 and is currently Chairman of Chennai based Cancer Institute (WIA) said one ought to be ashamed of corruption but not of cancer. I was extremely disturbed to read your reference to cancer in the context of the recent scam unearthed at your bank. Corruption is a crime and something to be ashamed of; cancer is not Shanta said in her letter. Observing that several cancer patients are cured and lead productive lives she said we do not want the word cancer to be associated with guilt hopelessness or dread. And definitely not with the shame. She also appealed to the others not to use the word in cancer in such sense as it could outrage medical personal working in the field of cancer prevention and cure. The spate of frauds in the banking sector running into thousands of crores or rupees have outraged common people who often liken deep-rooted corruption to something pernicious as cancer. The worried government yesterday asked all state-owned banks to scrutinise non performing assets (NPAs) exceeding Rs 50 crore for fraud and accordingly report the matter to Central Bureau of Investigation (CBI).
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