By Faiz Askari, Founder Editor of SMEStreet
The banking fraud is major and most latest setback for the entire Indian economy. The scale and size of this scam is yet to be explored but one can surely say it has made a heavy dent of the economy.
Moreover, experts are even pointing out that the fraud at Punjab National Bank could well be in the vicinity of Rs 21,000 crore, if one were to account for the secured loans to the Nirav Modi group and the Gitanjali group of companies.
But there are many aspects to this whole episode. Mohit CHoksi of Gitanjali Gems came forward in front of the employees and expressed his innocence at least in front of his employees through an email Now, this needs to be checked and explored.
Investigative agencies have prioritised this issue and working hard to crack down on both groups and attaching their assets, many other banks, in addition to PNB, may struggle to recover the money loaned to these groups. Finance Minister , Mr Arun Jaitley have also expressed clearly that there will be no exclusion from investigations for such act. Mr. Jaitley communicated that no one will be left unpunished on this.
PNB informed the stock exchanges about the Rs 11,400 crore worth of unauthorised transactions at its Brady House branch based on forged letters of undertaking (LoUs). The bank alleged that two of its officials had issued the forged LoUs, which allowed the Gitanjali group and Nirav Modi group of companies to borrow money from overseas banks, with PNB as the guarantor of the loans.
But in addition to this, a consortium of 31 banks led by ICICI Bank has issued loan of Rs 5,200 Crore to Mehul Chokshi’s Gitanjali Group. Nirav Modi firms Stellar Diamond and Solar Exports and Diamonds have together borrowed close to Rs 4,000 crore from banks.
While this whole issue is under high priority for investigation agencies, this could also influence the banker to become stricter towards lending. An if that happens, which is looking possible, the biggest suffers could be small traders, entrepreneurs who wish to take loans for their small businesses.