(PTI)
The Reserve Bank may provide four quarters to Punjab National Bank (PNB) for making provisions against the country’s biggest ever banking fraud of Rs 12,646 crore allegedly masterminded by billionaire diamantaire Nirav Modi. The bank has written a letter to the banking sector regulator seeking its opinion on making provisions for the fraud, sources said. Although there is a direction of the RBI on provisioning to be made in case of loan fraud, the bank is taking pre-emptive action to deal with extraordinary situation created by unearthing of this mega fraud. There is no precedence of fraudulent Letter of Undertaking (LoUs) issued earlier, so the RBI is likely to allow PNB to make provision against the fraud not exceeding over four quarters.
Last month, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 280.7 crore were first issued on January 16 this year. At the time, PNB had said it was digging into records to examine the magnitude of the fraud. In the complaint, PNB had named three diamond firms — Diamonds R Us, Solar Exports and Stellar Diamonds — saying they had approached it on January 16 with a request for buyers’ credit for making payment to overseas suppliers.
