MUMBAI (Reuters) - India’s state-run UCO Bank said it has $411.82 million in exposure to fraudulent transactions carried out at Punjab National Bank (PNB).
PNB, India’s second-largest state-run lender, said on Wednesday that it had detected fraudulent transactions worth $1.77 billion at a single Mumbai branch that had benefited “a few select account holders”, and that it had reported the matter to law enforcement agencies.
UCO Bank, in a filing to the Bombay Stock Exchange late on Saturday, said its Hong Kong branch granted loans against letters of credit issued by PNB and was “fully confident” of receiving payment from PNB.
The alleged fraud at PNB benefited billionaire jeweller, Nirav Modi and jewellery retailer Gitanjali
The Central Bureau of Investigation (CBI) detained two employees of Punjab National Bank and an employee Nirav Modi’s company.
Indian banks could take a hit of more than $3 billion from loans and corporate guarantees provided to diamond companies at the centre of the alleged fraud at PNB, the tax department has estimated.
On Sunday, India’s financial crime agency, the Enforcement Directorate, conducted searches at various locations of companies tied to Modi and Choksi, a government official said, but did not wish to be identified as he was not authorized to speak to media.
Reporting by Rajendra Jadhav; Editing by Toby Chopra and Susan Fenton