Top bank officials summoned as PNB fraud probe widens

Top bank officials summoned as PNB fraud probe widens

Top bank officials summoned as PNB fraud probe widens

Axis Bank Ltd said it has an exposure of around Rs200cr to companies owned by Nirav Modi and Gitanjali group, who are being investigated for their alleged involvement in fraudulent transactions at another bank. The Serious Fraud investigation office has sent summons to officials of 31 banks for questioning. As part of the investigation, the SFIO has issued summons to heads of over 30 banks that have exposure to companies of diamond traders Nirav Modi and Mehul Choksi.

A special court on Saturday had issued non-bailable warrants (NBWs) against Modi and Choksi in the alleged scam.

Meanwhile, the CBI told a Mumbai court on Monday that violation of norms for issuance of Letters of Undertaking (LoUs) to benefit billionaire jeweller Nirav Modi and his uncle Mehul Choksi had been going on since 2010.

Axis Bank, the third largest private sector lender, does not have any direct exposure to Gitanjali, while it was among the several banks whose overseas branches had loaned money to PNB based on the fraudulent LoUs.

Axis Bank said its exposure to these entities is just Rs 200 crore and that the bank is not a leader in the consortium.

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Before this, CBI has detained Vipul Chitalia, the Vice President of Gitanjali Group of Companies, as a part of its probe into the PBN scam. While top officials of Axis Bank have met SFIO officials on Tuesday, ICICI Bank has submitted all details to SFIO in the Gitanjali Group investigations, an official with direct knowledge of the matter said. We have not issued any Letter of Undertaking (LOU) nor do we have any buyer's credit exposure against LOUs with respect to the Nirav Modi group of companies as well as the Gitanjali group of companies...

Indian lenders have come under increased scrutiny after steps taken by the RBI under the governorship of Raghuram Rajan forced bank officials to stop ever-greening bad loans.

SFIO is understood to have also called officials from other banks including ICICI Bank, they said.

Bankers say in many Indian banks the SWIFT system, which is used for worldwide transactions, and the core banking system work independently of each other. These amounts are then credited to the LoU issuing bank's Nostro accounts.

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