Top Indian private banks under scanner in bank fraud probe

Rahul Gandhi Congress

Congress President Rahul Gandhi

Mumbai: The Punjab National Bank (PNB) managing director Sunil Mehta on Wednesday appeared before the Serious Fraud Investigation Office (SFIO) for recording his statement in connection with the Rs 12,600 crore fraud unearthed at one of its branches in Mumbai.

"The government on its own, as he (Azad) said and the opposition has collectively demanded, should have agreed to what we are saying - to discuss this because the money of the people is not safe in the banks", said Sharma.

Indian investigators have so far arrested almost 20 people, including some senior executives of companies owned by Modi and Choksi as well as high-ranking officials of the Punjab National Bank, in the bank fraud probe.

Though Nirav Modi (R) has not yet been arrested, India's External Affairs Ministry has revoked his passport as well as his uncle Mehul Choksi (L) for their involvement in the scam.

SFIO is also expected to call officials of almost 31 banks which have an exposure to the companies of diamond traders Nirav Modi and Mehul Choksi.

Both Kochhar and Sharma have been summoned for giving Rs5,280 crore working capital facility to Mehul Choksi-promoted Gitanjali Group by a consortium of 31 banks. For its part, Axis Bank said it has Rs 200 crore exposure to the Modi and Gitanjali groups. Its exposure to the Gitanjali group, it said, is not the largest among the lenders in the consortium.

"The Prime Minister's Office, RBI, Serious Fraud Information Office (SFIO) and the Enforcement Directorate received complaints".

While the SFIO is investigating the Rs 12,363-crore fraud at PNB and whether funds were siphoned off by firms separately led by the Modi-Choksi duo violating the Companies Act, the ED is believed to have found evidence that Choksi and Modi diverted money to related companies and even routed it back to banks seeking re-issue of LoUs. As per these LoUs, PNB assured the overseas branches of Indian banks such as the Allahabad Bank, Axis Bank and Union Bank of India that it would stand guarantee to the loans given by the latter banks to the firms of Modi and Choksi.

According to some reports, the SFIO may question top executives of more than 30 other banks in connection with the fraud. This was 36.7 per cent higher than the Rs. 32,547.50 crore of gross bad loans that the bank held a year ago.

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