Financial Services Secretary Rajiv Kumar said this seems to be an isolated case and is not going to impact other lenders. The Finance Ministry has taken proactive steps by asking the lender to report the matter to CBI and Enforcement Directorate (ED) so that action can be taken quickly, he told PTI.
The Bank has detected some fraudulent and unauthorised transactions in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance, Indias second-biggest state-run bank said in a regulatory filing. Based on these transactions other banks appear to have advanced money to these customers abroad, it said.
While PNB did not name the other lenders, Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit based on letters of undertaking (LoUs) issued by PNB. An LoU is a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers.
Foreign bank branches too are under investigation.
Three other jewellers, Gitanjali, Ginni and Nakshatra are under the scanner with CBI and ED looking at their arrangements with various banks and end use of money, a senior official of a public sector bank told PTI.
No immediate comments were available from these companies.
Last week, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 280.7 crore were first issued on January 16. At the time, PNB had said it was digging into records to examine the magnitude of the fraud.
In the complaint, PNB had named three diamond firms Diamonds R Us, Solar Exports and Stellar Diamonds saying they had approached it on January 16 with a request for buyers credit for making payment to overseas suppliers. The bank sought 100 per cent cash margins for issuing LoUs for raising buyers credit, which was contested by the firms saying they had availed of the facility from as early as 2010.
Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi are partners in Diamonds R Us, Solar Exports and Stellar Diamonds, which have shops in foreign locations such as Hong Kong, Dubai and New York.
Among those suspended is a deputy manager, Gokulnath Shetty, who was posted at PNBs foreign exchange department in Mumbai since March 31, 2010. He had allegedly along with another official Manoj Kharat fraudulently issued LoUs to these firms without following prescribed procedure or making entries in the banking system, avoiding detection of transactions. PTI
Source : http://assamtribune.com