Nirav Modi fraud and Punjab National Bank
The agency has alleged Rs 7080.86 crore were siphoned off by Choksi and his companies | Getty Images
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The bank Tuesday posted its largest-ever quarterly loss of Rs 13,416.91 crore for the January-March period, mainly on account of high provisioning for bad loans.

Mumbai: Punjab National Bank said today that its total liability works out to Rs 14,356.84 crore on account of the fraud allegedly carried out by jewellery designer Nirav Modi and associates.

The fraud was detected at PNB’s Brady House branch in Mumbai involving certain accounts under ‘gems and jewellery’ sector wherein, through apparent connivance between “these entities and few employees of the bank”, some Letters of Undertaking (LoUs)/Foreign Letter of Credit (FLCs) were issued fraudulently to certain overseas branches of Indian banks through misuse of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging system, a network used by financial institutions to securely transmit information through a standardized system of codes.

The fraud allegedly perpetuated through LoUs/FLCs is currently being investigated by different agencies.

The CBI Monday filed its first charge sheet in the matter detailing the roles of Nirav Modi, his brother Nishal Modi and Subhash Parab, an executive in Nirav Modi’s company.

“The liabilities on account of LoUs/FLCs, which became due up to March 31, 2018 amounting to Rs 6,586.11 crore have been paid by the bank…,” the PNB said in a regulatory filing, while announcing its fourth quarter result.

It further said that as a prudent measure, the bank has created liability in the books in respect of LoUs/FLCs which are becoming due after 31 March amounting to Rs 6,959.79 crore.

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“Bank will make payments to the concerned banks on the due dates of LoUs/FLCs.

“After including outstanding amounts under other credit facilities to the above entities, the amount involved now works out to be Rs 14,356.84 crore,” PNB said.

The Reserve Bank has permitted PNB to make provisions against the fraud amount.

The filing further said that the bank has made higher than required provisions amounting to Rs 7,178.42 crore.

The remaining provision of Rs 7,178.42 crore will be made during the first three quarters of the ensuing financial year.

The bank Tuesday posted its largest-ever quarterly loss of Rs 13,416.91 crore for the January-March period, mainly on account of high provisioning for bad loans.

It had reported standalone profit of Rs 261.90 crore in the fourth quarter of 2016-17.

The total income for the fourth quarter also declined to Rs 12,945.68 crore, from Rs 14,989.33 crore in the year-ago period.

-PTI

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