SFIO summons ICICI, Axis Bank CEOs in connection with PNB fraud

Howard TerryMar 07, 2018

ICICI Bank led the 31-bank consortium that extended credit to the tune of Rs 5,280 crore to Mehul Choksi's Gitanjali Group. As per a Moneycontrol report, ICICI Bank has no exposure to Nirav Modi group of companies, but have given working capital loans along with a consortium to Gitanjali group.

Quoting sources, media agency ANI said the SFIO had issued letters to some banks asking to explain about the working capital facility given to Gitanjali group.

The CBI had earlier questioned ICICI Bank executive director NS Kanan as part of its probe.

Bosamiya, then additional general manager (operation) and Pandya, then finance manager of Firestarter Diamond International Pvt Ltd., a Nirav Modi's diamond firm, were arrested for their alleged role in the preparation of applications for the fraudulent Letter of Understandings (LoUs) submitted to the PNB.

ICICI Bank chief executive Chanda Kochhar and Axis Bank chief executive Shikha Sharma were summoned by the SFIO to help the agency understand the amount of exposure and whether due diligence was followed while lending.

The 12,636-crore PNB scam was allegedly perpetrated by billionaire jeweler Nirav Modi and his uncle Mehul Choksi, the promoter of Gitanjali Gems. With Axis Bank and ICICI Bank officials complying with the SFIO summons, other banks are likely to follow the suit. They have since fled from country.

Till date, the Enforcement Directorate (ED) has carried out searches at over 198 locations across the country and seized properties worth almost Rs 6,000 crore, while the CBI has arrested at least 18 persons in the case so far.

SFIO has also summoned the PNB managing director Sunil Mehta for recording of his statement in the case. "Some of the banks have already started replying", said an ED official.

It is claimed that firms colluded with officials at a city branch of state-run Punjab National Bank to clear letters of undertakings without proper diligence, resulting in the scam. But, in case of a default, the bank that has issued the LoU has to pay the liability to the credit giving bank along with the accruing the interest.

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