Indian lawmakers want PM to speak on alleged $2bn bank fraud

07 March, 2018, 00:12 | Author: Alyssa Little
  • Punjab National Bank MD and CEO Sunil Mehta

Several top bank officials, including ICICI chief Chanda Kochhar and Axis Bank's Shikha Sharma, were on Tuesday summoned by the Serious Fraud Investigation Office (SFIO) in connection with Mehul Choksi's Gitanjali Group fraud case.

ICICI Bank had said it neither had issued any Letter of Undertaking (LOU) nor had any buyer's credit exposure against LOUs with respect to the Nirav Modi group of companies as well as the Gitanjali group of companies.

The CBI on Tuesday arrested Gitanjali Group Banking Operations Vice President Vipul Chetalia.

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.

The SFIO also said PNB MD and CEO, Sunil Mehta, has been summoned on Wednesday.

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The SFIO's Mumbai head confirmed to India Today that both Chanda Kochhar and Shikha Sharma have been summoned. It does not have any exposure to companies linked with Modi. The SFIO also issued letters to select banks, asking them to explain the working capital facility given to Gitanjali Group.

An LoU is a guarantee by a bank to pay another lender for imports by companies and is considered crucial for cross-border trade. He has been taken for addressing at the Bandra-Kurla Complex, an authority said.

An LoU is a guarantee which is given by an issuing bank to Indian banks having branches overseas to grant short-term credit to the applicant.

Shares of the State Bank of India fell 2.77 per cent to settle at Rs 256.50 on BSE, while that of ICICI Bank tumbled 2.64 per cent to end the day at Rs 295.10. The investigating agency had issued a look out circular against him.

After the state-owned Punjab National Bank, which is the epicentre of the fraud, two of the country's leading private sector banks - ICICI Bank and Axis Bank - are now under the scanner. The scam unearthed at PNB's branch in Mumbai allegedly involved diamond merchant Nirav Modi and various officials from his company colluding with senior bank officials to issue LoUs without proper checks and securities.



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