PNB fraud row: Scam up by Rs 1,251 crore, CBI questions top banker

In a communication to the CBI, the PNB said its Brady House branch in Mumbai had issued more than the hitherto known 293 LoUs, exposing the bank to further fraud of Rs 1251 crore

Written by Deeptiman Tiwary | New Delhi | Updated: February 28, 2018 5:26 am
Punjab National Bank, PNB fraud, Nirav modi, PNB fraud row, PNB scam, CBI, Allahabad Bank, LoUs, India News, Indian Express, Indian Express News The PNB branch in Fort Mumbai from where Rs 11.300 Cr fraud has been spotted. (Express photo: Ganesh Shirsekar)

The CBI Tuesday questioned Usha Ananthasubramanian, former managing director of Punjab National Bank, in connection with the loan scandal involving companies of diamantaire Nirav Modi and his uncle Mehul Choksi. Agency officials said the extent of the fraudulent transactions at the bank had been revised upward to Rs 12,636 crore following fresh information from the bank.

Ananthasubramanian is currently CEO of Allahabad Bank, one of the banks whose overseas branch provided buyer’s credit to Modi and Choksi against Letters of Undertaking issued by the PNB.

In a communication to the CBI, the PNB said its Brady House branch in Mumbai had issued more than the hitherto known 293 LoUs, exposing the bank to further fraud of Rs 1,251 crore.

CBI sources said all these LoUs were issued in 2017-18 on the request of Choksi-owned Gitanjali group of companies. The total number of LoUs under the scanner, sources said, add up to more than 300.

The PNB, in a filing to stock exchanges, said the amount of unauthorised transactions could go up by more than Rs 1,300 crore. “We have to inform that quantum of reported unauthorised transactions can increase by $204.25 million (approximately),” the filing said.

Other than Ananthasubramanian, the CBI also questioned Nehal Ahad, general manager, international division of PNB, and Vimlesh Kumar, general manager, Mumbai zone. On Monday, the agency had questioned three statutory auditors of the bank. Two more auditors were being questioned Tuesday.

It also questioned N S Kannan, executive director, ICICI Bank, to understand the account books of the Gitanjali group.

The ICICI Bank said: “We have no exposure to the Nirav Modi group of companies. We have not issued any Letter of Undertaking 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. We are working capital lenders to the Gitanjali group of companies along with several other banks in the consortium. Our exposure to the Gitanjali group of companies is not the largest among lenders in the consortium. We are fully co-operating with the investigating agencies in their efforts.”

Ananthasubramanian, CBI sources said, was being questioned to understand how the PNB granted LoUs during her time at the bank and what information she had on the bank’s dealings with Modi and Choksi. She was PNB managing director from August 2015 to May 2017.

As chairperson of the Indian Banks Association, Ananthasubramanian issued a statement two days ago on the PNB scam, saying banks needed to improve their risk management systems and plug security loopholes. She stressed on connecting the SWIFT system with the Core Banking System, a lacuna that led to the PNB fraud going undetected for several years.

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  1. B
    b v
    Feb 28, 2018 at 3:06 pm
    Improving risk mgt systems? Big hogwash. The loop was probably intentional. The bank info tech mgr and directors should be arrested.
    1. S
      S Kumar
      Feb 28, 2018 at 8:20 am
      CBI teams must have a CAG Official in it . He must give his Report seperately.
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        1. S
          S Kumar
          Feb 28, 2018 at 8:21 am
          BOGUS !!!!
        2. Sankaran Krishnan
          Feb 28, 2018 at 7:37 am
          Now the query is what role the so called Former MD of PNB during her regime in 2015-17 had done and why she had not taken the initiative to plug the security loopholes and the Risk Management systems and who had prevented doing that whereas now she is conveniently issues statement as IBA Chairperson ???? As CEO of Allahabad Bank will she had plugged the Security loopholes and Risk management system or what what role she is playing constructively after she became the CEO ???
          1. S
            Sidde Gowda
            Feb 28, 2018 at 6:35 am
            Gujju loot of India. Lage raho.
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