Public sector lender Punjab National Bank (PNB) has agreed to honour all 32 letters of undertaking (LoUs) and foreign letters of credit (FLCs) worth Rs 6,500 crore, going to mature before March 31 with seven banks.
In its official communiqué, the bank also stated to honour all subsequent LoUs and FLCs post its maturity. Further, the bank has decided to end all inter-bank disputes on fraudulent letters.
The Nirav Modi fraud case came to light when PNB informed Central Bureau of Investigation (CBI) and stock exchanges pertaining to its employees’ involvement in fraudulent activities with people associated with brands owned by Nirav Modi and Mehul Choksi.
Reportedly, the people involved in the crime managed to carry out the fraud by sending fake messages through SWIFT network, which other banks interpreted as approval from PNB.
PNB claimed that these activities had been operational since 2011. The bank revealed that its core banking system was not connected to its SWIFT network and it was not able to detect any discrepancies that were going on.