India's PNB to honour claims by banks, but with conditions - Economic Times

Gitanjali Gems

13/03/2018 04:12

March 13 (Reuters) - India's Punjab National Bank (PNB)
 PNBK.NS  will honour claims by peer banks who issued credit to
billionaire jeweller Nirav Modi and his uncle Mehul Choksi
against guarantees given by PNB, but the payments come with
riders, the Economic Times (ET) reported. 
    PNB, the second-biggest Indian state-run lender, uncovered
in January the alleged fraud in which certain bank officials
were suspected of colluding with Modi and Choksi to issue
fraudulent letters of undertaking (LoUs) for their firms to
raise loans from overseas branches of mostly Indian banks.
 urn:newsml:reuters.com:*:nL4N1QJ2AO
    Both Modi and Choksi have denied wrongdoing, and so have two
key accused PNB employees in the case that has been dubbed as
India's largest ever bank fraud.
    ET, citing sources, said PNB has agreed to honour claims due
by end-March but has mandated that peer banks will have to pay
PNB if investigative authorities prove that there was malafide
intent on the part of these banks. http://bit.ly/2Gn4uvB
    PNB did not immediately respond to requests for comment.
    About 60 billion rupees ($924.14 million) is due to these
banks by end of March, ET said.
    State Bank of India  SBI.NS  and three other state-run
banks, Union Bank of India  UNBK.NS , UCO Bank  UCBK.NS  and
Allahabad Bank  ALBK.NS , are among lenders who have extended
credit based on the LoUs issued by PNB that were later found to
be fraudulent.
  ($1 = 64.9250 Indian rupees)

 (Reporting by Krishna V Kurup in Bengaluru
Editing by Euan Rocha and Muralikumar Anantharaman)
 ((Krishna.VKurup@thomsonreuters.com; +91 80 6749 1310; Reuters
Messaging: Krishna.VKurup.thomsonreuters.com@reuters.net;))