By Anirudh Saligrama
The $1.8-billion fraud at Punjab National Bank Ltd. has left lenders worried about who will make good on the money lent on allegedly fraudulent guarantees that billionaire jeweller Nirav Modi and related firms had obtained.
The countrys second largest public sector bank disclosed that its staff issued fraudulent Letters of Undertaking based on which Modi and his firms got short-term buyers credit worth more than Rs 11,000 crore. The loans were given by branches of a host of Indian banks.
UCO Bank has the highest exposure of about Rs 2,635 crore linked to the guarantees. Its followed by Allahabad Banks exposure of Rs 2,400 crore and Union Bank of India at Rs 1,920 crore.
The countrys largest lender, State Bank of India, said it has an exposure of about Rs 1,360 crore but does not have any direct exposure to the absconding jewellery designer, according to a PTI report. Quoting SBI Chairman Rajnish Kumar, the newswire reported that the bank has some exposure to Gitanjali Gems Ltd., owned by Mehul Choksi, Modis uncle, but it was negligible.
Bank of Baroda has the least exposure of about Rs 425-450 crore, it said in its conference call. Axis Bank Ltd. said that it had sold all of the referred transactions.
This article has been published in collaboration with Bloomberg|Quint.