ED summons top bank chiefs as PNB fraud probe widens

Axis Bank CEO Shikha Sharma. Source https

ICICI Bank led a consortium of 31 banks that lent money to the Gitanjali Group.

It has also been said that the SFIO may also summon all the 31 banks, which are a part of the consortium, for questioning in the case. Since they had no pre-arranged credit limit, the branch official asked the companies to put down the full amount as collateral so the bank could issue LoUs to authorise the credit.

India's biggest-ever bank fraud of 1.8 billion United States dollars is getting murkier with each passing day. The Central Bureau of Investigation had also questioned ICICI's Executive Director NS Kanan. "We would like to question both of them", the head was quoted as saying.

According to the Central Bureau of Investigation (CBI), the government-run PNB official Gokulnath Shetty would return these documents to top company officials after issuing the letters that enabled Nirav Modi and his uncle Mehul Choksi's companies to get credit overseas.

In a related development, mastermind of the PNB fraud and VP of Gitanjali Group of companies Vipul Chitalia was intercepted by the immigration authority at Mumbai airport after he landed from Bangkok.

ICICI Bank had said it did not have any exposure to Nirav Modi group of companies but was only lending working capital to the billionaire jeweller's firm along with several other banks. Its exposure to the Gitanjali group, it said, is not the largest among the lenders in the consortium.

After media reports that ICICI Bank managing director and chief executive Chanda Kochhar and her Axis Bank counterpart Shikha Sharma have been summoned by SFIO regarding the case, stock exchanges had sought clarifications from both the lenders. The investigators will start with state-run PNB on Wednesday and will subsequently cover the other lenders, the people said, asking not to be identified as the details are private.

The accused officials of PNB did not enter the instructions for these LoUs and in their internal software to avoid scrutiny.

The scam was disclosed about a month ago, when PNB alleged that the jewelers colluded with some PNB officials to get fake letters of undertaking (LoUs), which they used to obtain loans from overseas branches of Indian banks.

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