India PNB's CEO meets serious fraud office amid probe into $2 bln scam

Gitanjali Gems

07/03/2018 09:05

* PNB CEO meets SFIO, after ICICI, Axis Bank meetings on
Tuesday
    * Other investigators also probing PNB loan fraud
    * PNB shares fall for fourth straight day   

    By Francis Mascarenhas and Devidutta Tripathy
    MUMBAI, March 7 (Reuters) - The chief executive of India's
Punjab National Bank (PNB)  PNBK.NS  met officials of the
serious fraud office on Wednesday, as authorities widened a
probe into a $2 billion fraud that has been billed as the
country's biggest banking scam.
    Sunil Mehta's appearance before the Serious Fraud
Investigation Office (SFIO) follows its meeting with executives
of at least two other banks on Tuesday. 
    PNB did not immediately respond to a request for comment on
the SFIO probe.
    In the fraud at PNB which was first disclosed by the bank in
February, the lender and police have accused some bank employees
of colluding with two jeweller groups which raised credit from
overseas banks based on fraudulent guarantees issued by rogue
PNB staff.
    Police have also so far arrested 19 people including eight
of PNB's current and former employees, along with executives
from jeweller Nirav Modi and his uncle Mehul Choksi's companies.
    Executives from private sector lenders ICICI Bank  ICBK.NS 
and Axis Bank  AXBK.NS  met with the SFIO on Tuesday, according
to sources with direct knowledge of the matter.
    In a statement to the stock exchange late on Tuesday, Axis
said the SFIO had sought information from it on the accounts of
Nirav Modi and Choksi's Gitanjali group of companies. 
    ICICI Bank also told the stock exchange on Tuesday its
executives continue to "engage actively and provide requisite
inputs" to investigative authorities, without commenting on
Tuesday's meeting.
    Indian authorities including the Central Bureau of
Investigation and the Enforcement Directorate have conducted
extensive searches and questioned people in connection with the
PNB fraud.
    Both Choksi and Modi have denied the allegations and lawyers
for the two key accused PNB employees in the case have also said
they are innocent.
    A source and documents reviewed by Reuters on Tuesday showed
the amount involved in the fraud is likely to rise beyond the $2
billion mark.  urn:newsml:reuters.com:*:nL4N1QO42V
    Shares in Punjab National Bank  PNBK.NS  fell as much as 3.9
percent on Wednesday, tumbling for a fourth straight session.
PNB has lost more than 40 percent of its market capitalisation
since disclosing the fraud last month.

 (Reporting by Devidutta Tripathy
Editing by Euan Rocha and Muralikumar Anantharaman)
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430;
Reuters Messaging:
devidutta.tripathy.thomsonreuters.com@reuters.net))