By BloombergQuint Desk
Punjab National Bank Ltd. will honour “all bona fide” commitments and efforts are on to protect the financial interest of banks involved, managing director and CEO Sunil Mehta today said at a press conference in New Delhi.
Mehta said the Rs 11,000-crore fraud mainly involves foreign branches of Indian banks, adding the country’s second-largest state-run lender will follow the Reserve Bank of India’s instructions on repayment to peers.
Mehta said the fraud was detected in the third week of January and the lender approached investigating agencies thereafter. “We have made criminal complaints against staff involved in addition to clients,” he told reporters.
The bank has also asked jeweller and designer Nirav Modi to meet in person and present them with a written repayment plan, after Modi made a formal but “vague” offer to repay liabilities, Mehta said.
- Fraud started in 2011, was detected by the Punjab National Bank in the third week of January.
- The bank approached the Central Bureau of Investigation on Jan. 29 and filed the FIR a day later.
- Informed the markets regulator and all lenders.
- The FIR prompted raids across locations of Nirav Modi’s businesses.
- PNB doesn’t want to reveal so much that it hurts the investigation.
- No concrete plan from Nirav Modi and others to repay money so far, only vague offers; asked Modi to submit a formal repayment plan.
- PNB will honour all bona fide commitments; the bank has conducted consortium meetings.
- Taken action against staff involved directly and those who failed in supervisory action.
- The employees involved didn’t enter information in the bank’s systems and the lender has taken action against them.
- It was internally detected when a customer came for renewal of a letter of undertaking.
- The LoU has been converted into a funded liability hence classified as contingent liability.
- Our bank’s credit exposure to these two groups is approximately Rs 1,700 crore.
- Bank examining any systemic failures.
- The investigation will decide if entire onus is on the Punjab National Bank.
- If entire onus is on PNB, the lender will be responsible towards it.
- The bank doesn’t have any funded exposure as of now.
- Initiated recovery process, the Enforcement Directorate is helping PNB.
- Trying to protect the financial interest of all lenders.
- The Finance Ministry is seized of the situation.
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