PNB's damage control | Committed to 'clean banking', will honour 'bonafide commitments,' says bank

In what can be termed as a damage control exercise, Punjab National Bank today said that the Rs 11,400 crore scam was just a ‘standalone incident.’

Addressing the much-anticipated press conference, PNB’s Managing Director Sunil Mehta on Thursday said that the fraud took place in one of the branches of the bank. 

Amid reports of new dip in its stock, the PNB MD reiterated the organisation was committed to clean banking. He also said that PNB will honour all it bonafide commitments.

‘Fraud was first detected in 2011,’ Mehta said adding that PNB is taking action against its own employees too. 

He also said that the bank has issued an advisory to PNB’s lenders. The Government of India is monitoring the situation and we are getting full support in nabbing the culprits, Mehta said. 

However, he also said that so far there are no directions from the Reserve Bank of India. ‘PNB has capability and capacity to come out of this. In response to our registered FIR, raids are being conducted on involved groups establishments; documents and records are being seized. Steps are being taken to protect financial interest of banks,’ Mehta said.

Earlier on Wednesday, the bank had confirmed fraudulent activities at its branches in Mumbai, worth transactions USD 1771.69 million for the benefit of some account holders.

Mehta said that the scam was first detected by PNB officials in 2011 and they had reported it to the concerned agencies.

PNB has also suspended 10 of its officials in connection with the case. Modi had allegedly cheated the bank to the tune of Rs. 280.7 crore.

The Central Bureau of Investigation (CBI) had on Monday booked Nirav Modi, his brother Nishal Modi and the officials of PNB in this regard.

It has emerged that the fraudulently issued Letters of Undertaking (LoUs) from the Mumbai branch of PNB were in favour of Hong Kong branches of Allahabad Bank and Axis Bank, that helped facilitate Rs 280.7 crore fraud by Modi among others.

According to the official sources, Nirav Modi left the country on January 1.

CBI had received the complaint form PNB on January 28 and a case was registered in the case on January 31st.

(With agency input)