PNB fraud: Banks yet to separate real PNB sales from fake ones
TNN|
Feb 20, 2018, 10.55 AM IST
MUMBAI: Lenders are trying to unravel the maze of letters of credit raised by the Nirav Modi and Mehul Choksi groups, trying to ascertain if any are genuine transactions. Although the letters of undertaking (LoUs) were issued through PNB without authorisation, lenders feel that there is a possibility some of them may be genuine sales and some money might come back.
A senior banker said that at present it is difficult to say which letter of credit is issued in the normal course and which is fraudulent. “In Gitanjali, there were regular limits. At present, we are assuming that some which are associated with particular parties are all frauds,” he said.
Many of the contracts have not devolved on the bank. “We are waiting for them to mature so that the numbers would crystallise,” he said. Banks which had met last weekend to break the impasse over the unauthorised LoUs issued by PNB, failed to get the lender to agree and honour its commitments. Lenders had then decided to approach the regulator for a resolution.
IBA sources said that an appointment would be sought with RBI deputy governor N S Vishwanathan on Tuesday since all bank offices in Mumbai were closed on account of Shiv Jayanti on Monday. Lenders have said that they are willing to offer a credit facility to PNB if it agreed to meet its commitment.
However, a PNB source said that the bank was in no need of funding support. “The bank has enough liquidity, given our balance sheet size. It is just that we feel our liability is restricted to bona fide transactions,” said the source.
SBI chairman Rajnish Kumar on Monday said that the dispute over the LoUs would be settled “amicably” by Indian banks. Kumar said that the issue is likely to be settled bilaterally and he did not see any problems with payments if RBI guidelines are followed. Meanwhile, ICICI Bank, which is the lead bank in the consortium for the Gitanjali group, is understood to have appointed Delhi-based auditor T R Chadha to conduct a forensic audit of the company.
A senior banker said that at present it is difficult to say which letter of credit is issued in the normal course and which is fraudulent. “In Gitanjali, there were regular limits. At present, we are assuming that some which are associated with particular parties are all frauds,” he said.
Many of the contracts have not devolved on the bank. “We are waiting for them to mature so that the numbers would crystallise,” he said. Banks which had met last weekend to break the impasse over the unauthorised LoUs issued by PNB, failed to get the lender to agree and honour its commitments. Lenders had then decided to approach the regulator for a resolution.
IBA sources said that an appointment would be sought with RBI deputy governor N S Vishwanathan on Tuesday since all bank offices in Mumbai were closed on account of Shiv Jayanti on Monday. Lenders have said that they are willing to offer a credit facility to PNB if it agreed to meet its commitment.
However, a PNB source said that the bank was in no need of funding support. “The bank has enough liquidity, given our balance sheet size. It is just that we feel our liability is restricted to bona fide transactions,” said the source.
SBI chairman Rajnish Kumar on Monday said that the dispute over the LoUs would be settled “amicably” by Indian banks. Kumar said that the issue is likely to be settled bilaterally and he did not see any problems with payments if RBI guidelines are followed. Meanwhile, ICICI Bank, which is the lead bank in the consortium for the Gitanjali group, is understood to have appointed Delhi-based auditor T R Chadha to conduct a forensic audit of the company.
(This article was originally published in The Times of India)
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