INSUBCONTINENT EXCLUSIVE:
loan of Rs 5,280 crore extended by a consortium of 31 banks led by ICICI Bank to the companies of absconding billionaire jeweller Mehul
Choksi has come under the scanner of the CBI, officials said today.The agency questioned three officials from foreign branches of Indian
banks, which had given credit facilities to the companies of absconding billionaire jewellers Nirav Modi and Mehul Choksi, on the basis of
Letters of Undertaking (LoUs) issued by Punjab National Bank's Brady House branch in Mumbai
The USD 2 billion scam became public in January after the CBI registered an FIR in the matter, but by that time both the high-profile
jewellers had left India with family, they said.Two officials of Canara Bank's branch in Bahrain, including its branch manager, and an
official of Bank of India's branch in Antwerp in Belgium were questioned by a CBI team in Mumbai, they said.Meanwhile, the agency officials
said that while their focus remains on the fraudulent LoUs, the loan of Rs 5,280 crore to the companies of Choksi in 2016 will come under
its probe at a later stage.They said whether a fresh FIR will be registered in the case or the ambit of an existing FIR will be expanded,
will be decided before proceeding with action in the matter.The agency in February had examined a senior ICICI Bank functionary too, they
said.It is alleged that Mehul Choksi and Nirav Modi got LoUs and Foreign Letters of Credit (FLCs) of USD 2 billion issued in favour of
foreign branches of Indian banks based on fraudulent claims.The accused PNB officials did not enter the instructions for these LoUs in their
internal software to avoid scrutiny.They were sent through an international messaging system for banking called SWIFT, which is used to pass
instructions among banks globally to transfer funds.An LoU is a guarantee given by an issuing bank to Indian banks having branches abroad to
grant short-term credit to the applicant.In case of default, the bank issuing the LoU has to pay the liability to the credit-giving bank
along with the accruing interest.The PNB officials allegedly sent these messages to Indian banks - Canara Bank, State Bank of India, Bank of
India, Axis Bank, Allahabad Bank - located in Antwerp, Hong Kong, Bahrain, Mauritius, Frankfurt without making entries in the banking
software about the LoUs.Upon receiving the messages from PNB under SWIFT, the banks abroad transferred these amounts into Nostro account of
PNB with them.A Nostro account is an account that a bank holds in a foreign currency in another bank to enable foreign trade by its
