Punjab National Bank fraud case: RBI, Sebi to seek help from Hong Kong regulators

Billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from a branch in Mumbai to secure overseas credit from other Indian lenders.

Published: 14th February 2018 11:28 PM  |   Last Updated: 15th February 2018 03:11 AM   |  A+A-

Punjab National Bank | Reuters File Photo


NEW DELHI: The Reserve Bank and the Sebi are likely to approach their counterparts in Hong Kong for cooperation in the matter relating to the whopping over Rs 11,000 crore fraud at public sector lender PNB where several entities have come under the scanner, officials said today.

The regulators are set to spread their net overseas as it has been found that credit was availed from various bank branches in Hong Kong on the basis of Letters of Undertaking (LoUs) issued by Punjab National Bank.

Officials said the Reserve Bank of India (RBI) would be approaching its counterpart Hong Kong Monetary Authority (HKMA) to gather more details in the PNB matter.

Similarly, the Securities and Exchange Board of India (Sebi) would be getting in touch with the Securities and Futures Commission (SFC).

According to the officials, the LoUs were mostly used for availing credit at Hong Kong-based branches of some other Indian banks.

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.

Several other entities which are in the diamond trade, including from South Africa, are also under the lens, they added.

Further, the officials noted that another public sector bank, which is currently under the scanner for business dealings with a South African group, is also being probed as the two cases might be linked.

Punjab National Bank today said it has detected a USD 1.

77 billion (about Rs 11,400 crore) scam where billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from a branch in Mumbai to secure overseas credit from other Indian lenders.

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 LoUs issued by PNB.

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 said.


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