How PNB fell victim to India’s biggest bank fraud

Canada Goose online Mumbai: India’s Punjab National Bank (PNB), the second biggest state run lender, stunned the country’s financial sector when it announced this week it had discovered fraudulent transactions worth $1.77 billion at a single branch in Mumbai. Canada Goose online

buy canada goose jacket cheap The fraud, by far the biggest ever detected by an Indian bank, comes uk canada goose to light at a time when lenders especially the state run banks are hobbled by $147 billion in soured loans on their books, a problem that has choked Canada Goose sale new lending and hurt the country’s economic recovery. buy canada goose jacket cheap

canada goose clearance Despite canada goose store tight fiscal conditions, the government recently extended a $14 billion uk canada goose outlet bailout to ailing state banks as part of a broader $32 billion rescue plan. The sector also faces higher capital requirements by next year to meet new global banking rules known as Basel III. canada goose clearance

Canada Goose Parka Following is an explainer on the PNB fraud and its implications for other lenders and India’s banking sector: Canada Goose Parka

Canada Goose Jackets WHAT IS THE FRAUD canada goose black friday sale ALLEGATION ABOUT? Canada Goose Jackets

cheap Canada Goose On Jan. 29, a PNB official from Mumbai filed a criminal complaint buy canada goose jacket with India’s federal investigative agency against three companies and four people, including billionaire jeweller Nirav Modi and Mehul Choksi, the managing director of Gitanjali Gems Ltd, saying they had defrauded the bank and caused a loss of Rs 2.8 billion ($43.8 million). cheap Canada Goose

The bank alleged two junior employees at the Mumbai branch had helped the companies and people managing them get “letters of canada goose clearance undertaking” (LoUs) from it without having a sanctioned credit limit or maintaining funds “on margin”. 31 and PNB said a detailed probe was underway. Investigators have said the latest disclosure was related to the earlier case filed.

canada goose coats on sale HOW DID THE FRAUD COME TO LIGHT? canada goose coats on sale

PNB says that on Jan. 16 the accused firms presented a set of import documents to the Mumbai branch and requested buyers’ credit to pay overseas suppliers. When the firms argued that they had used such facilities in the past without keeping any money on margin, PNB scanned through records and found no trace of any transactions, according to the bank’s account.

canada goose deals It then found that Canada Goose Parka two junior employees had issued LoUs on the SWIFT interbank messaging system without entering the transactions on the bank’s own system. Such transactions went on for years without detection, PNB said. canada goose deals

canada goose Banking sources have said in some banks the SWIFT system, which is used for international transactions, and the core banking system work independently of each other. In canada goose coats PNB’s case, it said the outstanding LoUs were not available on its core banking system run on Infosyss Finacle software, canada goose uk black friday thus Canada Goose Online the LoUs issued went undetected. canada goose


PNB has accused three companies Solar Exports, Stellar Diamonds and Diamond R US it said belong to Nirav Modi, a high end jeweller who runs his eponymous Nirav Modi stores that spread from New York to buy canada goose jacket cheap Hong Kong. Modi is worth $1.73 billion according to Forbes rankings.

canadian goose jacket Modi’s companies colluded canada goose with the bank staff, PNB canada goose factory sale said, adding that it suspected some officials at foreign branches of other Indian banks that extended credit were also involved. canadian goose jacket

canada goose clearance sale It also named Gitanjali Gems, Gili India and Nakshatra companies promoted by another jeweller, Mehul Choksi, who is Modi’s uncle. Gitanjali last week denied Choksi had any involvement with the alleged fraud, saying he would take “necessary legal steps” to get his name removed from the CBI case. canada goose clearance sale

Modi has not commented on the case. His flagship Firestar Diamond has said it had no involvement. PNB uk canada goose said it has begun criminal action against two staff members and suspended some others. Reuters was not immediately able to contact the two staff members. The finance ministry has issued an advisory to all banks to review their large customer exposures, according to media reports. The Enforcement Directorate, which investigates frauds involving foreign exchange transactions, was also conducting a probe, Mint newspaper said.

Canada Goose sale PNB has said the transactions are “contingent” in nature, and it will decide on the liability based on the law and the genuineness of underlying transactions. canada goose coats on sale Banking sources have said several other banks who have extended loans based on the PNB LoUs that were later found to be fraudulent are at risk of losing money. Canada Goose sale

Some of the banks say PNB Canada Goose Jackets is liable to pay since it issued the LoUs, although PNB, in a Feb. 12 “caution notice” addressed to chief executives of 30 banks, including two foreign banks, said the other banks also have a share in the blame as they “overlooked” certain Indian central bank canada goose uk outlet rules.

canada goose coats It also said none of the overseas branches of India based banks had shared with PNB any documents or information at the time of extending buyers’ credit to the companies. canada goose coats

PNB said Nirav Modi had written to the bank but had yet to offer any formal canada goose clearance sale proposal for a repayment. This cookie policy should be read together with our Canada Goose Outlet Privacy Policy.

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