Probe agencies issue summons to 31 bank heads, including ICICI and Axis Bank, over Punjab National Bank fraud case

NEW DELHI/MUMBAI: As part of the ongoing investigation into the $2-billion Punjab National Bank fraud case, 31 bank chiefs were issued summons separately by investigators trying to deconstruct the scam.

At least two agencies – the Enforcement Directorate (ED) and Serious Fraud and Investigation Office (SFIO)  – sought an explanation from bank chiefs including Chanda Kochhar of ICICI Bank and Shikha Sharma of Axis Bank on loans given to Gitanjali Gems Ltd and regarding letters of understanding (LoUs) extended to Nirav Modi’s firms. Last month, the authorities had interrogated the PNB management, including former chairperson Usha Ananthasubramanian.

While Kochhar and Sharma did not appear in person before the SFIO, both banks sent their representatives.

When contacted, neither ICICI Bank nor Axis Bank was willing to comment. However, in a note to the NSE, the former said: “To provide assistance to the investigating authorities, representatives of ICICI Bank continue to engage actively and provide requisite inputs.” For its part, Axis Bank said it has Rs 200 crore exposure to the Modi and Gitanjali groups. The bank sent a team led by deputy MD V Srinivasan and executives from the trade and transactions department to SFIO’s Mumbai office.

The SFIO, which comes under the Ministry of Corporate Affairs, plans to expand its investigation to all banks that had extended loans to Gitanjali Gems and its subsidiaries, a senior official with SFIO Delhi told Express.The assets declared by Gitanjali Gems while applying for loans will also be perused.

Clarifying the need for summoning the bank chiefs, the official said there were discrepancies in the declarations made by the company to different banks.

A consortium of 31 banks, led by ICICI Bank, had lent about Rs 5,300 crore working capital to Mehul Choksi-led Gitanjali Gems, while Modi firms Stellar Diamonds, Solar Exports and Diamonds together borrowed about Rs 4,000 crore, of which PNB’s exposure stands in excess of Rs 1,700 crore.

Did money route back to banks for fresh LOUs?

While the SFIO is investigating the Rs 12,363-crore fraud at PNB and whether funds were siphoned off by firms separately led by the Modi-Choksi duo violating the Companies Act, the ED is believed to have found evidence that Choksi and Modi diverted money to related companies and even routed it back to banks seeking re-issue of LoUs. The ED is also investigating the planned listing of Choksi’s Nakshtra World and Modi’s Firestar International

Gitanjali Group veepee arrested

The CBI on Tuesday arrested the Vice President (Banking Operations) of Gitanjali Group, Vipul Chitalia, in connection with the PNB loan fraud case. He was detained at the Mumbai airport and later arrested. A court in Mumbai granted police remand till March 17.