Punjab National Bank (PNB) has detected another fraud of Rs 9.09 crore at its Brady House branch in Mumbai, which is at the centre of the Rs 12,600 crore fraud involving billionaire jeweller Nirav Modi and his uncle, Mehul Choksi.
The latest fraud involves a little known company called Chandri Paper and Allied Products Private Limited that was issued two letters of undertaking (LoUs), according to the FIR registered by the Central Bureau of Investigation on March 9 on the complaint of PNB. This is fourth CBI FIR against the Brady House branch.
Two branch employees, Gokulnath Shetty, a retired deputy manager, and Manoj Kharat, a single window operator, have been named as accused along with Chandri Papers and its two directors Aditya Rasiwasia and Ishwardas Agarwal.
Shetty and Kharat are already in custody in Modi and Mehul Choksi cases. The two conspired to issue two letters of undertaking to Chadri Papers’ directors in or around April, 2017 by fraudulent means, the FIR says.
Following the Modi fraud, the Reserve Bank of India on March 13 barred banks from issuing LoUs, a move that could deal a blow to trade financing in India and raise credit costs for importers.
{{/usCountry}}Following the Modi fraud, the Reserve Bank of India on March 13 barred banks from issuing LoUs, a move that could deal a blow to trade financing in India and raise credit costs for importers.
{{/usCountry}}The central bank also barred lenders from issuing letters of comfort as trade credit for importing goods into India with immediate effect.
Importers prefer taking loans based on LoUs as they are denominated in foreign currency and are cheaper than rupee credit. A letter of credit, on the other hand, is used to establish the credit worthiness of the buyer in the purchase of goods.