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 11,400 crore fraud at public sector lender PNB where several entities have come under the scanner, officials said on Wednesday.
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 on Wednesday said it has detected a $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.
Updated Date: Feb 15, 2018 16:24 PM