PNB Rs 11,400 cr scam: State Bank of India hopes to get its Rs 1,360 cr dues back, says chairman
When asked if banking sector would see more skeletons tumbling out of the closet, SBI chairman Rajnish Kumar said it looks like the case is confined to a particular branch of PNB
New Delhi: SBI Chairman Rajnish Kumar on Monday said he expects PNB to clear the bank's $212 million (Rs 1,360 crore) dues in the Nirav Modi case.
"I am very much confident that things will get sorted out between PNB and other banks," Kumar said in an interview to CNBC TV18.
"As far as our exposure is concerned on PNB, that number is very much confirmed, calculated and advised to PNB," Kumar said.
He said the exposure of SBI to Gitanjali Gems - one of the companies involved in the scam - has also been crystallised and there was no issue on that.
"So our numbers, our claim is clear because there are some secondary market purchases, so double counting has to be avoided," the SBI Chairman and MD told the news channel.
When asked if banking sector would see more skeletons tumbling out of the closet, Kumar said it looks like the case is confined to a particular branch of PNB.
"At least for SBI, I can confirm that there is no such issue, no such problem. And I am sure that by now all other banks also would have reviewed their portfolios and would have arrived at the similar conclusion because if something was wrong somewhere, by now, I presume, it could have come out,"Kumar said.
When asked if regulator RBI has issued any other instruction to banks other than integrating the core banking solution with the SWIFT system, Kumar said he has no further knowledge on the issue.
He said RBI has instructed the banks to put in place the safety mechanism with respect to global money transfer software SWIFT and the banks are in a position to comply with that by April.
Kumar also said the PNB case is more of operational risk and not related to credit risk.
"Whatever has gone wrong, it is about the operational weakness and we have to keep that segregated from the credit risk."
Other than SBI, lenders like Union Bank of India(UBI) and Allahabad Bank also have exposure to PNB to grant loans on the basis of LoUs that were issued fraudulently to Modi and his uncle Mehul Choksi.
Allahabad Bank has an exposure of about $366.87 million in the case to PNB through its overseas branch in Hong Kong. UBI has exposure of nearly $300 million through its foreign branches.
On 14 February, PNB had informed the stock exchanges that the bank was defrauded to the tune of $1.77 billion (nearly Rs 11,400 crore) by Modi and his associate companies by getting loans through illegal LoUs for over seven years.
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