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Bank Fraud Investigation in India Extends to Leading Private Banks

08 March 2018
Bank Fraud Investigation in India Extends to Leading Private Banks

His questioning comes a day after SFIO summoned senior executives of ICICI Bank and Axis Bank seeking details regarding their exposure to firms related to Nirav Modi and Mehul Choksi, the alleged masterminds behind the scam.

The former union minister said the three accused Nirav Modi, Mehul Choksi and Jatin Mehta, are involved in bank frauds to the tune of Rs 27,000 crore and alleged that all of them had access to the government and to its leadership. ICICI Bank is the lead banker in the consortium of 31 banks which have a collective exposure of over Rs 6,800 crore to Gitanjali Gems.

Sources said the heads of India's two leading private banks, ICICI Bank and Axis Bank, are next in line to be questioned by the Serious Fraud Investigation Office, which Tuesday issued summons to them to appear before it in the scam that has rocked the country. The bank's exposure to these entities is about Rs200 crore, it added. "The bank is not the leader of the lending consortium in these groups".

"The bank is a part of the working capital lender consortium in the Gitanjali group of companies along with several other banks wherein its exposure is not the largest", it said. The bank said it is co-operating with the investigating agencies.

As has been widely reported, officials at the Brady House branch of PNB in Mumbai allegedly issued Rs. 12,600 crore worth of Letters of Undertaking (LoUs) and foreign letters of credit in favour of the companies of Modi and Choksi, to the Hong Kong branches of Allahabad Bank and Axis Bank in an irregular manner. "The size of the fraud has now gone (up)...and the same is likely to go even higher", the CBI said in the court filing.

Nirav Modi company has also sought copies of the search warrant, Enforcement Case Information Report registered by ED and other documents pursuant to which the search and seizure was conducted by ED at the premises of Firestar Diamond.

To buttress his stance that PNB has strong growth potential, Jaitley noted that the public sector bank had a high share of current account and savings account (CASA) deposits, healthy provision-coverage ratio of over 60 per cent and high potential for mobilising capital through sale of non-core assets.