NEW DELHI: Banks may just take a hit of greater than $three billion from loans and company guarantees supplied to diamond companies at the centre of an enormous alleged fraud at the state-run Punjab National Bank (PNB), the tax division has estimated.
As of March 2017, banks had prolonged loans and guarantees value Rs 17,632 crore ($2.74 billion) to companies tied to billionaire jeweller Nirav Modi and his uncle Mehul Choksi, the tax division said in a notice seen by way of Reuters.
Since then, the loans and guarantees would have increased during the last 12 months and the overall "hit" to Indian banks "may well exceed" $three billion, in line with an internal notice ready by way of the tax authority on its preliminary investigation into the rustic's largest financial institution fraud case.
According to a grievance by way of PNB, the most important fraud in Indian banking historical past concerned two junior officials at a Mumbai financial institution branch issuing "letters of undertaking" to firms related to Nirav Modi and Choksi for them to acquire credit from in a foreign country branches of other Indian lenders.
The financial institution said these fraudulent transactions had taken place over quite a few years and amounted to $1.77 billion.
None of these letters of enterprise - necessarily credit guarantees - have been recorded on the financial institution's internal device system and instead have been transmitted during the SWIFT interbank messaging system, "thus avoiding early detection of fraudulent activity", the tax notice said.
It said that Choksi's Geetanjali Gems and its subsidiaries led by way of Choksi handled 32 banks. Among those who offered credit to Choksi and Nirav Modi, well-known for his chain of stores stretching from New York to Beijing, have been the Union Bank of India, Allahabad Bank and Axis Bank, the tax notice said.
Union Bank of India, every other state-run lender, said on Friday it has an exposure of $300 million as a counter-party lender. Axis Bank, a non-public sector lender, has said it has offered all its exposure associated with the fraud.
Among the findings of the tax division was that several firms through which Modi and his uncle have been concerned had other people of restricted method indexed as majority partners. Those other people were not identified in the tax division notice.
The total loans in the 3 firms of Modi, Stellar Diamond, Solar Exports and Diamonds "R Us was Rs 39,929 crore, while total capital of the partners was Rs 400 crore, it said.
It said the 3 firms' "trade receivables", or the amount being billed to customers, were "a lot higher than total turnover of the 3 companies concerned in the fraud, which presentations that items are being offered for comparable celebration and are either over-invoiced or no longer coming in any respect".
Nirav Modi and Choksi left the rustic in early January.
As of March 2017, banks had prolonged loans and guarantees value Rs 17,632 crore ($2.74 billion) to companies tied to billionaire jeweller Nirav Modi and his uncle Mehul Choksi, the tax division said in a notice seen by way of Reuters.
Since then, the loans and guarantees would have increased during the last 12 months and the overall "hit" to Indian banks "may well exceed" $three billion, in line with an internal notice ready by way of the tax authority on its preliminary investigation into the rustic's largest financial institution fraud case.
According to a grievance by way of PNB, the most important fraud in Indian banking historical past concerned two junior officials at a Mumbai financial institution branch issuing "letters of undertaking" to firms related to Nirav Modi and Choksi for them to acquire credit from in a foreign country branches of other Indian lenders.
The financial institution said these fraudulent transactions had taken place over quite a few years and amounted to $1.77 billion.
None of these letters of enterprise - necessarily credit guarantees - have been recorded on the financial institution's internal device system and instead have been transmitted during the SWIFT interbank messaging system, "thus avoiding early detection of fraudulent activity", the tax notice said.
It said that Choksi's Geetanjali Gems and its subsidiaries led by way of Choksi handled 32 banks. Among those who offered credit to Choksi and Nirav Modi, well-known for his chain of stores stretching from New York to Beijing, have been the Union Bank of India, Allahabad Bank and Axis Bank, the tax notice said.
Union Bank of India, every other state-run lender, said on Friday it has an exposure of $300 million as a counter-party lender. Axis Bank, a non-public sector lender, has said it has offered all its exposure associated with the fraud.
Among the findings of the tax division was that several firms through which Modi and his uncle have been concerned had other people of restricted method indexed as majority partners. Those other people were not identified in the tax division notice.
The total loans in the 3 firms of Modi, Stellar Diamond, Solar Exports and Diamonds "R Us was Rs 39,929 crore, while total capital of the partners was Rs 400 crore, it said.
It said the 3 firms' "trade receivables", or the amount being billed to customers, were "a lot higher than total turnover of the 3 companies concerned in the fraud, which presentations that items are being offered for comparable celebration and are either over-invoiced or no longer coming in any respect".
Nirav Modi and Choksi left the rustic in early January.
'Banks may take more than $3bn hit from PNB fraud'
!['Banks may take more than $3bn hit from PNB fraud']()
Reviewed by Kailash
on
December 28, 2018
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