The Serious Fraud Investigation Office (SFIO) Tuesday summoned ICICI Bank CEO Chanda Kochhar and Axis Bank Managing Director Shikha Sharma and a few others in connection with loans and guarantees extended to firms promoted by diamond jeweller Nirav Modi and his uncle Mehul Choksi, said an official familiar with the development.
ICICI Bank is a part of the consortium of 31 banks that extended loans and guarantees of Rs 5,280 crore to the Gitanjali Group promoted by Choksi. The loans were extended to Gitanjali Group between November 2010 and April 2014 against a collateral of only about Rs 100 crore, sources familiar with the development said. ICICI Bank is the leader of the consortium and has lent over Rs 400 crore to Gitanjali Group.
On February 14, Punjab National Bank (PNB) in a regulatory filing, said two bank employees had “fraudulently issued Letters of Undertaking (LoUs) and transmitted SWIFT instructions to the overseas branches of Indian banks” to raise buyer’s credit for companies of Modi and Choksi to the tune of Rs 11,400 crore without “making entries in the bank system”.
While PNB did not name the other lenders, Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit based on LoUs issued by PNB. A day after PNB’s filings, Axis Bank informed the regulators that it is an active participant in the secondary market for transactions against LoUs and it “sold down” certain such dealings with PNB.
Sources said the SFIO has asked top officials of a few private and public lenders to appear in person or through a legal representative for questioning on the loan facility given to the jewellery firms. On Tuesday, V Srinivasan, Deputy Managing Director of Axis Bank, visited the SFIO office in Mumbai.
According to banking sources, top officials of private and public sector banks have been summoned in the normal course of investigation by the SFIO. “The bank will submit all the required documents to the authorities,” said an Axis Bank official.
Choksi’s firms took loans and guarantees from Allahabad Bank, Andhra Bank, Bank of Maharashtra, Bank of Baroda, Bank of India, Central Bank of India, Canara Bank, Corporation Bank, Dena Bank, Export Import Bank of India, Indian Overseas Bank, ICICI Bank, IDBI Bank, IndusInd Bank, Karnataka Bank, Karur Vysya Bank, Punjab National Bank, Punjab and Sind Bank, Standard Chartered Bank, State Bank of Hyderabad, State Bank of India, State Bank of Bikaner and Jaipur, Syndicate Bank, Union Bank, United Bank, Vijaya Bank, State Bank of Mauritius, Catholic Syrian Bank, Lakshmi Vilas Bank, Jammu and Kashmir Bank and the Oriental Bank of Commerce.
At least 73 companies associated with Choksi and 41 firms of Modi have come under the scanner of the CBI, Enforcement Directorate (ED) and the SFIO in the wake of alleged fraudulent transactions of Rs 12,700 crore at PNB.
Meanwhile, the Enforcement Directorate (ED) has also written to all lenders that have had exposure to Modi and Choksi firms and directed them to submit documents pertaining to their loans and guarantees. Sources said a number of banks have already submitted documents with the agency.