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Nirav Modi fraud: PNB to pay back lenders' money, but on a condition, says report

Among the banks which have exposure to mega PNB fraud are: SBI, UCO Bank, Allahabad Bank, Union Bank of India and Bank of Baroda. UCO Bank has the highest exposure of about Rs 2,635 crore followed by Allahabad Bank which has an exposure of Rs 2,400 crore.

twitter-logo BusinessToday.in        Last Updated: March 13, 2018  | 16:08 IST
Nirav Modi fraud: PNB to pay back lenders' money, but with a rider, says report

The Punjab National Bank will pay back the lenders who issued credit to billionaire jewellers Nirav Modi and Mehul Choksi against the Letters of Undertaking issued - fraudulently - by the PNB. However, the payments will come with a rider. The Economic Times today reported that the PNB has agreed to honour claims due by March-end, but the payments will have conditions attached.

And the condition is: the banks will have to return the money to PNB, if the investigating agencies during probe find that the lenders' intention was not bona fide while issuing the credit to the accused billionaires.

The ET in its report cited two bank officials who said: "While settling the dues, PNB will issue a letter to banks that they would be liable to make good the payment if the findings by the investigative authorities prove that there was malafide intent on the part of peer banks. Once this is acknowledged by peer banks, PNB will make payments."  

The PNB's stand, it seems, hasn't changed over the issue as PNB MD and CEO Sunil Mehta in a press conference last month had said that the bank would honour its 'bona fide commitments' in the multi-crore bank scam. He said: "If the investigation process says it is our liability, then we will accept it." The bank later posted a notice on its website, saying: "We will honour all our bona fide commitments under LoUs and FLCs as per law of the land and as per specific existing guidelines of regulator i.e. RBI on LOUs and FLCs."

The PNB also informed the stock exchanges about the liability of the defrauded money. It said: "In the bank, these transactions are contingent in nature and liabilities arising out of these on the bank shall be decided based on the law and genuineness of the underlying transactions." Among the banks which have exposure to mega PNB fraud are: SBI, UCO Bank,  Allahabad Bank, Union Bank of India and Bank of Baroda.

UCO Bank has the highest exposure of about Rs 2,635 crore followed by Allahabad Bank which has an exposure of Rs 2,400 crore. UBI is at third place with Rs 1,920 crore. The SBI has an indirect exposure of about Rs 1,360 crore and Bank of Baroda has the least exposure of about Rs 425-450 crore.

 

 

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