PNB fraud case: LoUs worth Rs 4,900 crore were issued by the bank in just two months during 2017 to Nirav Modi, family
The LoUs to Gitanjali group companies were issued by PNB from March 1, 2017 to May 2, 2017 and the total value of the defrauded amount stood at Rs 3032.12 crore (USD 473.77 million).
NEW DELHI: All the 143 irregular Letters of Understanding (LoU) were issued by the PNB to Mehul Choksi promoted jewellery companies-Gitanjali, Gili and Nakshatra-within a period 63 days beginning March 1, 2017, with the defrauded amount being Rs 4886.72 crore.
The LoUs to Gitanjali group companies were issued by PNB from March 1, 2017, to May 2, 2017, and the total value of the defrauded amount stood at Rs 3032.12 crore (USD 473.77 million).
Likewise, all the Letters of Credit were issued in 2017 worth Rs 1854.60 crore (USD 281.15) to Hong Kong Branch of Union Bank of India (USD 110214177) and, UCO Bank, Hong Kong (USD 247492719.4) besides USD 2200011.65 as Foreign Letter of Credit to Gitanjali Gems redeemable by Intesa Sanpaolo SpA, Italy at its branch in Hong Kong.
Both the LOUs and LCs were redeemable for a period of one year as against prescribed RBI norm of validity for only 90 days in case of import of semi-precious and precious stones including pearls.
“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 Buyer’s Credit, the LoUs are established for 360 days ab-initio.
This should have evoked suspicion in the minds of overseas branches of Indian banks extending buyers credit. These banks (foreign branches of Indian banks) never raised any alarm on violation of RBI guidelines and continued to provide funding against fraudulent LoUs,” the PNB said in its complaint to the CBI on February 13 based on which the latest case by the CBI was registered.
The PNB complaint to the CBI further said, “There is no documentary evidence available to prove that these import transactions are bonafide trade transactions. There are several discrepancies in LoUs which could have been easily detected by ordinary due diligence.”
The first FIR also mentioned the period of offence during 2017. The Government’s claims that the scam started off in 2011 and acquired the mega proportions subsequently runs counter to the contents of the FIR.