Sunday, 18 November, 2018

ED summons top bank chiefs as PNB fraud probe widens

Indian benchmark indices end negative for fourth consecutive session, RBI penalizes Axis Bank and Indian Overseas Bank RBI slaps penalty of Rs 3 cr on Axis Bank, Rs 2 cr on IOB
Edward Snyder | 07 March, 2018, 00:14

The agency wants to join the dots connecting the irregular issue of letters of undertaking (LoU)/foreign letter of credit (FLC) by a PNBbranch in Mumbai to the companies promoted by Modi and Choksi, and figure out how they had been honoured by Indian banks' Hong Kong branches to extend working capital to them.

The SFIO also said PNB MD and CEO, Sunil Mehta, has been summoned on Wednesday.

A statutory inspection of Axis Bank, with reference to its financial position as on March 31, 2016, revealed "violations of various regulations issued by RBI in the assessment of NPAs", or bad loans, the central bank said in a statement. While ICICI Bank stocks tanked 2.64%, Axis Bank stocks fell 1.31%. Kochhar and Sharma will appear before the Serious Fraud Investigation Office (SFIO) in Mumbai on Tuesday afternoon, sources in the agency said. "We would like to question both of them".




Meanwhile, ICICI Bank has said that it has worked with Choksi but has no ties with jewellery designer Nirav Modi, who is Choksi's nephew. The official handling the case sought 100 per cent cash guarantee before any such letters could be issued to which the company officials said no such guarantee was sought in the past.

As per a report, the two were called in context of the probe in credit extended to Mehul Choksi's Gitanjali Group by a bank consortium.

The ICICI bank had earlier claimed that it was not exposed to the fraud committed by Nirav Modi group. "Our presentation to the Gitanjali gathering of organizations isn't the biggest among moneylenders in the consortium", the bank had stated, including that it was "completely co-working with the researching offices in their endeavors". He didn't unveil some other insights about Chitalia's affirmed part in the PNB misrepresentation. The scam unearthed at PNB's branch in Mumbai allegedly involved diamond merchant Nirav Modi and various officials from his company colluding with senior bank officials to issue LoUs without proper checks and securities.

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