India's second-largest government-owned lender, has discovered a fraud worth $1.77 billion at one of its branches in Mumbai.
Soon after news of the fraud detection broke, sources from within the Central Bureau of Investigation said the agency had begun probing billionaire jeweller and diamond trader Nirav Modi in connection with today's fraudulent transactions.
Mumbai: Punjab National bank, India's second-largest government bank, reported today that $1.8 billion or over Rs 11,000 crore of taxpayers' money had been illegally transferred overseas to select customers from a single branch in Mumbai.
Stocks of Punjab National Bank (PNB) tumbled by over 10% intra-day on the Bombay Stock Exchange after the bank declared that it had discovered frauds to the tune of $1.771 billion (over Rs 11000 crore).
Fourth, the banks said they fraudulently issued eight LOUs totalling $4.42 crore, equivalent to Rs 280.70 crore, for Hong Kong-based branches of the Allahabad Bank and the Axis Bank. The transactions were "for the benefit of a few select account holders with their apparent connivance" and that "based on these transactions other banks appear to have advanced money to customers overseas".
The bank said it was committed to "clean and transparent banking" and that it would take a closer look at these transactions and "determine the bank's liability".
Investigative agencies have been informed about the latest fraud transactions, PNB said.
At the time PNB had said it was digging into records to see whether the hit was much deeper. All the persons are partners of Diamond R US, Solar Exports and Stellar Diamonds.
Meanwhile, the bank had also intimated stock exchange BSE about the "fraudulent and unauthorised" transactions worth over Dollars 1771.69 million in one of its branches in Mumbai.
The bank is already dealing with other allegations of fraudulent transactions.
While Rs280 crore is the amount of LoUs that have devolved, the remaining is the potential liability that the bank will face in the next one year, said a person familiar with the development.