- LATEST
- WEBSTORY
- TRENDING
BUSINESS
PNB Fraud: Bank suspend new LoUs for bullion importers
The move comes after Rs 11,400 crore scam that hit Punjab National Bank hard and more banks are said to have been affected by it
Updated : Feb 26, 2018, 06:30 AM IST
 "Punjab National Bank")
TRENDING NOW
)
This is India's most expensive school, also one of country's oldest, annual fee is Rs..., is located in...
)
Zeenat Aman is hospitalised, shares health update from 'recovery room': 'I've abandoned my...'
)
This Indian genius, a celebrated physicist, was nominated for Nobel Prize 9 times, never won it, converted to Hinduism due to..., name was..
)
How much time will it take for India to stop water flow to Pakistan after suspension of Indus water treaty?
)
Meet man who defeated Elon Musk to build world's largest..., Warren Buffett invested in his business, his net worth is...
)
Amitabh Bachchan, Aishwarya Rai Bachchan to Abhishek Bachchan: Uncover educational credentials of Bachchan family
)
After UPSC topper Tina Dabi, Srushti Deshmukh, Class 12 marksheet of IAS officer Smita Sabharwal goes viral, check her marks in..., she scored highest in...
)
Meet Anju Bhatt, daughter of Army officer, scored 312th rank in UPSC CSE 2024 without coaching; Know her success secret
)
Ranbir Kapoor once 'begged' Deepika Padukone for another chance, then actress 'caught him...': 'Everyone around me said he was straying'
)
Bad news for bankrupt Pakistan, this move by Modi govt leaves Islamabad worried as it takes 'emergency' steps for...
)
Who owns Vande Bharat, Shatabdi Express coaches? Not Indian Railways, their real owners are...
)
In the middle of IPL 2025, Sara Tendulkar buys this team, the name is...
)
Meet actress who was abandoned by her father, still became superstar, worked in 180 films, remained single even after marriage, her net worth is Rs..., name is..
)
Indian-Canadian couple's dream wedding in Bengaluru turns tragic as colour bomb explodes on bride's back, watch viral video
)
Good news for Ratan Tata's TCS as it earns Rs 53692 crore in just 5 days, emerges biggest...
Public Sector Banks in Gujarat have recently stopped issuing fresh Letter of Undertaking (LoU) to bullion importers in the state, said a top banker. The move comes after Rs 11,400 crore scam that hit Punjab National Bank (PNB) hard and more banks are said to have been affected by it. Traders in bullion and gold market here feel that the move will create shoratage of liquidity for the traders, who will now have to repay loans within a specified time limits.
A top banker told DNA, on the condition of anonymity, that banks had stopped issuing fresh LoU or renew existing LoU to bullion traders. "Whether LoU have been cancelled I am not aware of. This is a difficult job because, once availed LoU the businessmen is entitled to the buffer period for the payment. Cancellation would disrupt his payment cycle and he may not be able to pay the seller. Only in cases where the buyer has been issued unauthorised LoU, they can be cancelled. The process has started since February 20," said the banker.
LoU provides additional time period, over the duration of Letter of Credit (LC), to the importer to honour payment commitments. This is done when the importer is unable to pay within the time period of Letter of Credit (LC) and needs additional time, for which he is given a Buyer's Credit and LoU. "Now, they will not get additional time period to pay to the seller. They will have to pay within the duration of Letter of Credit," said the banker.
Ashok Choksi, a bullion importer said that while there are reports running round that fresh LoU are not issued, the is not aware of any importer, who has been refused fresh LoUs. "Lack of fresh LoU means now liquidity of cash will be tightened and players may have to sell inventory to pay immediately or have to pledge the stock to meet their payment commitments. Such moves have large scale impact on the business," said Choksi.
ADDITIONAL TIME
- LoU provides additional time period, over the duration of Letter of Credit (LC), to the importer to honour payment commitments
