Chanda Kocchar summoned in PNB fraud case

07 March, 2018, 00:13 | Author: Cary Erickson
  • Diamond merchant Nirav Modi. Credit Facebook  Nirav Modi

India's biggest-ever bank fraud of 1.8 billion U.S. dollars is getting murkier with each passing day. ICICI Bank led the 31-bank consortium that extended credit to the tune of Rs 5280 crore to Mehul Choksi's Gitanjali Group. NS Kannan, official chief ICICI bank, was the pioneer of consortium of the bank that loaned cash to Gitanjali Group, it has been asserted. "They have been summoned for giving the loan facility to Gitanjali Group".

The central bank also said the action on the two commercial banks is based on deficiencies in regulatory compliance "and is not meant to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers".

The ED had earlier issued summons to Modi and Choksi, both key accused in the scam cases, asking them to appear before the central agency.

We have not issued any Letter of Undertaking (LOU) nor do we have any buyer's credit exposure against LOUs with respect to the Nirav Modi group of companies as well as the Gitanjali group of companies... Sources indicated that the SFIO may soon summon other banks who are part of the consortium.

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After media reports that ICICI Bank managing director and chief executive Chanda Kochhar, and her Axis Bank counterpart Shikha Sharma have been summoned by SFIO regarding the case, stock exchanges have sought clarifications from both the lenders.

The CBI told the court that its investigation had found that the fraudulent issuance of letters of undertaking (LoUs), or guarantees, through a Mumbai branch of the bank had been going on since 2010. He has been taken for addressing at the Bandra-Kurla Complex, an authority said. He did not divulge any other details about Chitalia's alleged role in the PNB fraud.

Even as Nirav Modi and Mehul Choksi have fled the country after embezzling funds to the tune of thousands of crores, many of their assets have been seized and investigative agencies are swooping down on bank officials involved in the scam. Nirav Modi firms Stellar Diamond and Solar Exports and Diamonds have together borrowed close to Rs 4,000 crore from banks. In PNB's case, it said the outstanding LoUs were not available on its core banking system run on Infosys's Finacle software, and so went undetected.



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