Global News

RBI's NPA norms, PNB fraud pull down banking stocks

RBI's NPA norms, PNB fraud pull down banking stocks

The state-owned bank said it had detected a $1.77 billion fraud in which billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from one of its branches for overseas credit from other Indian lenders.

It added that the total amount of these transactions was 1,771.69 million dollars.These transactions were limited and the matter is referred to the law enforcement agencies to examine and book the culprits as per the law of the land.

Last week, Indian federal agents said they had launched an investigation into billionaire jeweller Nirav Modi, one of the country's richest men, over accusations that he and others defrauded PNB of $44 million. Based on this, foreign branches of Indian banks offer credit to buyers.

"I wish to make it very clear and this I can also convey on the behalf of the government that no shall be spared in the banking system who has sought to derail ordinary banking system to help Nirav Modi".

The bank said it has informed law enforcement agencies about the transactions. Most involved letters of understanding sent to overseas offices of Indian banks, which made the actual loans, said Sunil Mehta, Punjab National Bank's managing director.

The bank officials requested the firms to furnish 100 per cent cash margin for LOU for raising buyers' credit.

Missing 4-year-old girl found safe in Alabama
Evans, who's facing a possible kidnapping charge in SC , was eventually apprehended after crossing into Mississippi, Oliver said. Early Wednesday morning, the South Carolina Law Enforcement Division has issued a statewide alert for the 4-year-old girl.

Interestingly, had it not been for the three firms - M/S Diamond R U.S., M/s Solar Exports and M/s Stellar Diamonds having partners - involved in the fraud who approached the bank for another similar transaction, the bank may have never unearthed it.

Nirav Modi, as per reports, has said that he is ready to pay back the loans to the tune of Rs 5,000 crore.

Besides, the watchdog and the stock exchanges would analyse trading data of these companies and their top officials, some of whom are already under the scanner for insider trade and other violations, officials said. The news sent PNB stocks tumbling nearly 10% lower on the Bombay Stock Exchange.

PNB has accused three companies - Solar Exports, Stellar Diamonds and Diamond R U.S. - it said belong to Nirav Modi, a high-end jeweller who runs his eponymous Nirav Modi stores that spread from NY to Hong Kong.

In a statement issued to the stock exchanges on February 7, Choksi added that he retired as a partner in Diamonds R U.S. in 1999 and since then he has had no association or dealings with the firm.

"Earlier this month, a first information report was lodged by PNB and we raided various locations. Foreign branches of these banks, which had relationships with the outlets of a jewellery company, had taken significant exposures as well", sources said.


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