New Delhi, Feb 23: Stung by India’s biggest bank loan scam, the Finance Ministry on Friday tightened the norms for borrowers seeking loans above Rs 250 crore to prevent big scale loan frauds. The ministry, in a letter, directed overseas branches of four state-owned banks — SBI, Axis Bank, Allahabad Bank and Bank of India — in Hong Kong for the reconciliation of statements to check if the money released for specific transactions was used for the same purpose. Punjab National Bank was allegedly duped to the tune of Rs 11,300 crore by celebrity jeweller Nirav Modi and his uncle Mehul Choksi. [Also read: Priyanka Chopra Terminates Contract as Nirav Modi Brand Ambassador]
The banks were also asked to appoint special agency to monitor the status of loans above Rs 250 Crore. Similarly, the number of banks in a consortium giving loans cannot exceed above seven. While Vijay Mallya, facing extradition case in London, was given loans worth Rs 9,000 crore by a consortium of 17 banks, Rotomac owner Vijay Kothari took loans to the tune of Rs 3,695 crore from seven banks. [Also read: Wilful Defaulters Owe Banks Rs 1.1 Lakh Crore]
Earlier, PNB also tightened its norms for employees to access crucial global payment systems SWIFT. In an internal circular sent to its branches across the country, India’s second-largest public sector bank stated that only officer level ranking employees will be allowed to access the system authorising payments and barred clerk level employees to initiate any transaction on SWIFT. [Also read: Can’t Depose, Says Nirav Modi; ED Seizes Assets Worth Rs 100 Crore]
It has also devised new mechanism whereby three different officers will be initiating, authorising and verifying the transactions. The note highlighted that the officers will be able to authorise transactions to a limited sum based on their seniority.
“In continuation of efforts to strengthen SWIFT operation and deploy additional measures to ensure more effective control, it has been decided to set up SWIFT user base limits,” Rueters quoted the note as saying.
PNB, in a statement, alleged that celebrity diamond merchant Nirav Modi and his uncle Mehul Choksy duped it to the tune of Rs 11, 300 crore in connivance with several banks officers. After registering an FIR, the Central Bureau of Investigation (CBI) had arrested bank official Gokulnath Shetty and Harish Kharat.
Have Enough Assets to Settle Liability: PNB
The bank, in a statement, stated that it has enough capital and assets to meet liability as per law. It made the statement in view of apprehensions of other banks that released funds to Nirav Modi and Choksi’s companies on the basis of the letters of undertaking (LoUs) issued by PNB.
“We’ve enough assets/capital to meet liability as per law. We’ve followed lawful avenues as per law to recover dues & awaiting written reply from Disciplinary Authority,” the bank said.
Elaborating on the fraud, the bank said that it had alerted BSE and NSE immediately after unearthing dubious transactions. “On 05th February 2018, we on the basis of preliminary investigation report, informed simultaneously to our Board as well as to BSE and NSE of initial fraud case of Rs. 280.70 Crore,” it said.