PNB fraud case: Govt says news about Indian banks taking hit of $3 billilon false

There were reports that Indian banks could take a hit of more than $3 billion from loans and corporate guarantees provided to diamond companies.

The finance ministry on Monday clarified that news circulating that tax department has estimated Indian banks could take a hit of more than $3 billion pertaining to $1.8 billion Punjab National Bank (PNB) fraud, is false.

The Punjab National Bank (PNB), the second-largest state-run bank, said on February 14 that it had detected fraud of almost $1.8 billion at one of its branches. (AFP Photo)

“News appearing in certain section of media that Tax Department has estimated that Indian banks could take a hit of more than $3 billion due to alleged fraud at PNB, is false & factually incorrect,” the finance ministry clarified through a tweet.

The Punjab National Bank last week revealed that it had been defrauded of Rs 11,400 crore by diamond jeweller Nirav Modi. The fraud involved the issue of illegal Letters of Undertaking and foreign letters of credit in favour of Modi and the Gitanjali group of companies which were not authorised by the bank. The Central Bureau of Investigation and the Enforcement Directorate are investigating the fraud.