Punjab National Bank detects fraudulent transactions worth Rs 10000 crore

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Financial Services Secretary Rajiv Kumar said this seems to be an isolated case and is not going to impact other lenders. "The bank is committed to clean and transparent banking", PNB said.

Enforcement Directorate officers searched the Mumbai offices of Nirav Modi after he was accused of cheating state-owned Punjab National Bank (PNB) of 2.8 billion rupees ($43.8 million).

The sellers of the raw gems held accounts at foreign branches of Indian banks.

Industry insiders say Modi's colourful persona belies his meticulous attention to detail.

Earlier today, while addressing a press conference, Congress leader Randeep Surjewala said, "On 26 July 2016, Prime Minister was handed with all papers regarding Nirav Modi and one of his relative".

Banking industry leader and former Vice President of the All India Bank Employees Association Vishwas Utagi said if this was the scenario of one company pertaining to just one branch of PNB, then the situation was "truly alarming". According to media reports, Nirav Modi left the country on January 1 and the CBI received complaint from PNB on January 29. "The CBI and ED is looking at their arrangements with various banks and end use of money", a senior official said. Why were no red flags raised in overseas bank branches of Indian banks?

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Terming the matter "sensitive", Mehta said the bank has sought some "breathing time" from the related parties to bring the culprits to book.

PNB shares fell the most in a week on the news. Also, the government must introspect that when it is repeatedly infusing capital into loss making PSU banks with reckless risk management, where will the buck stop when it comes to accountability?

A day after high-level fraudulent practice to the tune of $1.8 billion in one of the Punjab National Bank's Mumbai branch was reported to the stock exchanges, Sunil Mehta, MD and CEO of the bank, said it "will not spare anyone" involved in the wrongdoing. The letter further read, "Axis Bank is also an active participant in the secondary market for such transactions, and the bank had sold down all of the referred transactions".

"In the bank, these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions", the statement said. However, it could not be immediately ascertained if the two fraud cases have a link.

A junior official at PNB fraudulently issued "letters of undertaking" (LoUs), allowing Niravi Modi group companies to get short term loans (buyers' credit) from overseas bank branches to pay the sellers. Sources said that all this was being done with the connivance of officials as high as deputy general manager since 2011.

This is in addition to the Rs 280 crore fraud case that he is already under investigation for, again filed by PNB.

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