India’s PNB seeks provisioning to cover scam loss
Punjab National Bank has written to the Indian central bank seeking its opinion on making provisions for losses of US$1.95 billion due to the scam
India’s Punjab National Bank, which was recently rocked by a huge banking scam allegedly masterminded by diamond merchants Nirav Modi and his uncle Mehul Choksi, both of whom fled abroad, has approached the Reserve Bank of India (RBI) seeking a staggered time frame to repay the amount.
The PNB has written to the central bank seeking its opinion on making provisions for losses of nearly 127 billion rupees (US$1.95 billion) caused by the scam, reports Press Trust of India.
Although there is a direction of the RBI on provisioning to be made in case of loan fraud, there is no precedence of losses caused by fraudulent letters of undertaking (LoUs).
The PNB has requested that the RBI allow it to provide for losses due to the scam over a period of four quarters, instead of in one go, as it expects to recover 40% of the lent funds, reports Economic Times.