While the central bank may have banned the system to avoid financial frauds in future, industry bodies say banning LoUs alone will not help curb malpractices.
Punjab National Bank (PNB), the country's second largest public sector bank, had detected the $1.8 billion fraud in one of its branches in Mumbai.
PNB reports a massive black hole in books, two-times government’s cash infusion size, pegs it at Rs 11,363 crore
Finger of suspicion on billionaire jewellery designer Nirav Modi and Gitanjali Gems; more banks may be hit as they gave loan on PNB’s letters of undertaking
Billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from a branch in Mumbai to secure overseas credit from other Indian lenders.
Punjab National Bank cautions other banks about modus operandi of Rs 11,400 crore fraud linked to Nirav Modi case
CBI sources say Nirav Modi, his wife, brother and others worked with bank officials to illegally obtain Letters of Undertaking, which were cashed overseas from different banks, both private and public