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SFIO summons banking leaders

07 March 2018

SFIO, the investigative agency under the ministry of corporate affairs (MCA), summoned Chanda Kochhar, managing director and chief executive officer of ICICI Bank, and Axis Bank CEO Shikha Sharma, or their authorized representatives, to seek information on the working capital loan given by the consortium of bankers to Gitanjali Gems, an MCA official said, requesting anonymity.

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. As part of the investigation, the SFIO has issued summons to heads of over 30 banks that have exposure to companies of diamond traders Nirav Modi and Mehul Choksi. NS Kannan, official chief ICICI bank, was the pioneer of consortium of the bank that loaned cash to Gitanjali Group, it has been asserted. Both of them have been accused of being in the centre of the Rs 11,400 bank fraud. Since they had no pre-arranged credit limit, the branch official asked the companies to put down the full amount as collateral so the bank could issue LoUs to authorise the credit.

Soon after the exposure of the PNB scam, Axis Bank had stated that while it had in the past done transactions against PNBs authenticated letters of undertakings, the private sector lender had since sold down all the referred transactions.

Earlier in the day, the Central Bureau of Investigation detained the vice president of banking operations at the Gitanjali Group, Vipul Chitalia, at the Mumbai airport for questioning. He didn't unveil some other insights about Chitalia's affirmed part in the PNB misrepresentation.

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Probe into one of India's biggest banking scams over lending extended to diamantaires - Nirav Modi and his maternal uncle Mehul Choksi, is widening.

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.

Bankers say in many Indian banks the SWIFT system, which is used for worldwide transactions, and the core banking system work independently of each other.

In case of default, the bank issuing the LoU has to pay the liability to the credit giving bank along with accruing interest.

SFIO summons banking leaders