RETAIL BANKING | Staff Reporter, India

India's largest bank fraud likely to swell beyond $2b

Most relevant documents on LoUs have not yet been recovered which may push the fraud value higher.

Reuters reports that the massive fraud at India’s state-run Punjab National Bank is likely to swell beyond the $2b so far outlined by the bank itself as relevant papers and loan guarantees have not been recovered which could push the value up and extend the bank’s exposure than what has been unravelled so far.

According to papers filed on Monday, the Central Bureau of Investigation said PNB did not have all the documents related to the LoUs, since those were returned to the borrower.

“Most of these documents are not yet recovered. The size of the fraud has now gone (up)...and the same is likely to go even higher,” the CBI said in the court filing.

The finance minister has also moved to merge over 35 overseas branches of state lenders following the massive PNB fraud cause. 

In what has been touted by the local media as the largest fraud in India’s banking history, PNB and police have accused diamond tycoon Nirav Modi and his uncle Mehul Choksi of colluding with bank employees to get credit from overseas banks using fraudulent guarantees.

Here's more from Reuters.

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