THE CENTRAL Bureau of Investigation (CBI) Thursday examined two Deputy General Managers (DGMs) of State Bank of India (SBI) attached to their Frankfurt and Mauritius branches in connection with the alleged over Rs 13,500 crore fraud caused to the Punjab National Bank (PNB) by diamantaires Nirav Modi and his uncle Mehul Choksi.
The two were examined at the BKC office of the agency in Mumbai on the alleged fraudulent Letter of Undertakings (LoUs) issued by PNB to the overseas branches of the Indian banks. On Wednesday, two officials of Canara Bank’s branch in Bahrain and an official from Bank of India’s Antwerp branch in Belgium were quizzed by the CBI.
CBI official, who spoke on the condition of anonymity, said these officials were examined on the credit facilities extended to the two accused and if there were any discrepancies noticed by them in the LoUs issued by PNB. In international banking system, LoU is a provision of bank guarantee, under which a bank allows its customer to raise money from another Indian bank’s foreign branch in the form of a short term credit. The LoU serves the purpose of a bank guarantee.
In its complaint to CBI, PNB has raised questions on the conduct of officials in the foreign branches of various banks as well. It has said that according to RBI, LoUs for trade in semi-precious and precious stones, including pearls are issued only for a period of 90 days but PNB officials were issuing LoUs for a period of even six months to a year. This, PNB said, should have raised an alarm in foreign branches.