Page 25 - Banking Finance April 2018

BANK FRAUD

Private bank officials Passport details may be made mandatory for big loans
summoned in PNB fraud Passport details of borrowers taking loans of Rs 50
crore and more may be made mandatory to en-
case sure a swift action in case of fraud and prevent
fraudsters from fleeing the country, a top official
said. Passport details will help banks to take timely
action and inform the relevant authorities to pre-
vent fraudsters from fleeing the country.

Jeweller charged with Rs. 390 crore bank fraud
Oriental Bank of Commerce's loans to Delhi Jeweller Dwarka Das Seth Interna-
tional and its owner Sabhya Seth turned non-perform-
Top executives of private sector bank ing asset (NPA) in 2014 but the bank approached the
ICICI Bank Ltd and Axis Bank Ltd ap- CBI only on August 16, 2017 - after the company had
peared before the Serious Fraud In- folded up and Seth fled the country, according to the
vestigation Office (SFIO) as investiga- bank's complaint to the CBI. The bank has accused the
tive agencies expanded their probe the company and its owner of defaulting on loans
into the alleged bank fraud by com- amounting to Rs 389.85 crore. The CBI registered an
panies linked to Nirav Modi and his FIR, six months after the complaint. The OBC alleges that Dwarka Das Seth
uncle Mehul Choksi. International took loans by way of letters of credit and other such credit facili-
ties for gold and diamond jewellery export/import between 2007 and 2012 but
SFIO and Enforcement Directorate
(ED) are investigating 31 private and failed to repay.
PSU banks that in a consortium gave Passport info must for Public sector banks loans over
working capital loans worth Rs.5,280
crore to Choksi-controlled Gitanjali Rs. 50 crore
Gems Ltd starting 2009. The government has asked PSB's to build a database of borrowers with loans of
This is in addition to the Rs.12,636 over Rs 50 crore as it mandated PSU lenders to collect their passport details in
crore Punjab National Bank (PNB) a bid to stop escape from the country in case of a default. "PSBs to collect pass-
fraud investigation, which involved port details of all new borrowers of loans above Rs 50 crore. Loan application
fake letters of undertaking. forms to be suitably modified," Rajeev Kumar, secretary, department of finan-
cial services, said.
ICICI Bank Ltd has an exposure of
Rs.750 crore to the Gitanjali group Punjab National Bank may be given one year to make
of companies and Rs.500 crore to
Gitanjali Gems. PNB has an exposure provisions for fraud
of Rs.900-1,000 crore, the highest Reserve Bank of India may provide 1 year to Punjab National Bank for making
among the lenders. provisions against the country's biggest ever banking fraud of Rs.12,636 crore
by Nirav Modi. The bank has written a letter to RBI seeking its opinion on mak-
SFIO, the investigative agency under
ing provisions for the PNB fraud, sources said.
the ministry of corporate affairs
(MCA), summoned Chanda Kochhar, RBI initiates special audit of PSU banks
managing director and chief execu- Reserve Bank of India has initiated special audit of PSU lenders with focus on
tive officer of ICICI Bank, and Axis
trade financing activities, especially relating to issuance of let-
Bank CEO Shikha Sharma, to seek in-
ters of undertaking (LoUs) by them, banking officials said. In
formation on the working capital addition, the RBI has asked all banks for details of the LoUs
loan given by the consortium of bank- they had written, including the amounts outstanding, and
ers to Gitanjali Gems, an MCA offi- whether the banks had pre-approved credit limits or kept enough cash on mar-
cial said.
gin before issuing the guarantees.

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