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PNB fraud: News about banks taking hit of $3 billion false, says Finance Ministry

The clarification comes amid reports that banks could take a hit of more than $3 billion from loans and corporate guarantees provided to jewellery designer Nirav Modi and Gitanjali Group of Companies.

Edited by: India TV Business Desk, New Delhi [ Published on: February 20, 2018 6:32 IST ]
PNB fraud: News about banks taking hit of $3 billion false,
PNB fraud: News about banks taking hit of $3 billion false, says Finance Ministry

The Ministry of Finance has clarified that news circulating that tax department has estimated Indian banks could take a hit of more than $3 billion (approx Rs 20,000 crore) pertaining to $1.8 billion Punjab National Bank (PNB) fraud, is false.

"News appearing in certain section of media that Tax Department has estimated that Indian banks could take a hit of more than $3 billion due to alleged fraud at PNB, is false & factually incorrect," the Ministry clarified through a tweet on Monday.

The clarification comes amid reports that banks could take a hit of more than $3 billion from loans and corporate guarantees provided to jewellery designer Nirav Modi and Gitanjali Group of Companies.

According to reports, till March 2017, banks had extended loans and guarantees worth $2.74 billion to companies tied to Nirav Modi and his uncle Mehul Choksi.

Since then, the loans and guarantees would have increased over the past year and the total "hit" to Indian banks "may well exceed" $3 billion, reports said.

The state-owned PNB, country’s second largest lender, had last week detected about Rs 11,400 crore scam where Nirav Modi  acquired fraudulent LoUs from the Brady House branch of the bank in south Mumbai to secure overseas credit from other lenders.

According to a complaint by PNB, these fraudulent transactions had taken place over a number of years.

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