The Punjab National Bank (PNB) has uncovered more suspected credit guarantee fraud in the Mumbai branch at the centre of a similar alleged scam worth over $2 billion. The CBI has registered a fresh case relating to “fraudulent” issuance of Rs 9 crore of loUs to Chandri Papers and Allied Products by PNB’s Brady House branch, at the centre of a storm over a similar fraud by billionaire jewellers Nirav Modi and Mehul Choksi.
Retired PNB employee Gokulnath Shetty and single-window operator at the branch, Manoj Kharat, who are facing CBI probe in the Modi-Choksi case, have been booked by the agency in the fresh FIR registered by it. The agency has also named the company and its directors as accused in the case, CBI said.
After filing the FIR on March 9, the agency has carried out searches at various locations. The newly uncovered scam raises fresh doubts about whether more such cases involving fraudulent guarantees lurk on the books of PNB, the second biggest state-run lender, or other Government-owned banks.
The CBI FIR said that Shetty retired on May 31, 2017, and Kharat entered into criminal conspiracy with directors of the company Aditya Rasiwasia and Ishwardas Agarwal. “As part of the conspiracy to defraud the public sector bank, they got issued two letters of Undertaking (loUs) for $1.4 million (about Rs 9.09 crore at the rate of Rs 64 per $) favouring SBI Antwerp, Belgium”, CBI FIR said.
The due date of payment for the loUs was January 20, 2020. It is alleged that for the issuance of the two loUs neither there was any available credit limit to the company nor any 110 per cent margin was retained by the bank, they said.
An loU is a service whereby the bank guarantees a customers payment obligation of a specified amount to an oveseas bank. Shetty and Kharat are already facing CBI probe in fraudulently issuing loUs and letters of Credit worth over Rs 13,000 crore to the companies of billionaire jewellers Mehul Choksi and Nirav Modi. Recently, the RBI has banned commercial banks from issuing letters of Undertaking (loUs) and and letters of Comfort (loCs) for trade finance as it was seen as a major loophole behind the PNB scam.