NEW DELHI: Overseas branches of five Indian banks were authorised by Punjab National Bank (PNB) officials to fund three companies owned by Nirav Modi and Mehul Choksi — Gitanjali Gems, Gili India Limited and Nakshatra. All 142 authorisations through Letters of Undertaking (LoU) were issued in a matter of only two months, between March 1 2017 and May 2, 2017.
This is stated by PNB in its latest complaint filed on Wednesday, February 15.
All the 142 LoUs were valid from the date of issue but their expiry dates ranged from February 9, 2018 to April 23, 2018. This means that most of them – 115 – would still be valid, a break-up of the list of LoUs shows. The list that is a part of the complaint by PNB categorises the transactions under seven heads: LoU date, issue reference, name of the financing banks, ‘our party’ (the company), credit received in nostro, principal amount and due date.
The maximum value was of one LoU issued on May 2, 2017 for $3,09,87,649 (about `193 crore). It was sent to Axis Bank, Hong Kong. The minimum value of an LoU was $18,50,467 (about `11 crore). This was to SBI, Mauritius (March 9, 2017).
The first LoU, issued on March 1 2017, was also issued to SBI, Mauritius. The principal amount was $21,01,346 with the expiry date February 9, 2018. Till March 20, 2017, 33 LoUs were issued to SBI Mauritius branch, and 40 LoUs worth $1.9 million to $3 million, were issued by PNB to Bank of India, Antwerp.
The Bahrain Branch of Canara Bank also financed seven LoUs, all issued on March 30, 2017. They were valid till March 15, 2018. State Bank of India’s Frankfurt Branch also financed 20 LoUs dated from April 5, 2017 to April 12, 2017. The minimum principal amount of the LoUs given to SBI Frankfurt ranged from $2 million to more than $3.2 million with a validity of almost a year.
The PNB complaint notes: “RBI prescribes that credit for import of semi-precious and precious stones including pearls should not be more than 90 days. However, in most cases the credit allowed under referred LoUs is much beyond 90 days. For outstanding buyers’ credit, the LoUs are established for about 360 days ab-initio. This should have evoked suspicion in the minds of overseas branches of Indian banks extending buyers’ credit. These banks never raised any alarm.”
