Punjab National Bank today said it has detected a Dollars 1.77 billion (about Rs 11,400 crore) scam where billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from a branch in Mumbai to secure overseas credit from other Indian lenders.
"The bank has detected some fraudulent and unauthorised transactions in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance", India's second-biggest state-run bank said in a regulatory filing. "Based on these transactions, other banks appear to have advanced money to these customers overseas", PNB said in a notice sent to the stock exchanges on February 14.The matter has been referred to law enforcement agencies. The bank said it has informed law enforcement agencies about the transactions.
State-owned Punjab National Bank on Wednesday suspended 10 officials in connection with jewellery designer Nirav Modi fraud case, reported news agency ANI.
Firestar, which was also not immediately available for comment, last week said it had no involvement with the case against Modi.
Shares in Punjab National Bank slumped as much as 6 percent in early trade even as the benchmark index made gains.
This would be the bank's second complaint in almost a month, that it has indicated Modi's involvement in a scam. BTVI news station cited unnamed sources saying Axis Bank had discounted 40 billion rupees ($624.4 million) worth of fraudulent "letters of undertaking" (LoUs) from PNB.
PNB did not name the other banks it said had advanced money to customers based on the fraudulent transactions.
The letter said it was found through the SWIFT trail that one junior level official unauthorisedly and fraudulently issued Letters of Undertaking (LoUs) on behalf of some companies belonging to Nirav Modi Group.
PNB is already dealing with other allegations of fraudulent transactions. "While tracing old entries, it transpired that buyer's credit based on fake LOUs might also have been paid through NOSTRO A/C", it alleged.