Punjab National Bank (PNB) could be labelled a
defaulter if it does not pay the Union Bank of India about Rs 1,000
crore by 31 March, according to a media report.
PNB
has to settle claims against letters of undertakings (LoUs) issued by it
earlier.
If PNB fails to do so,
the Indian banking sector, already troubled by frauds, will witness
an unprecedented event, where, for the first time, a bank will be
"technically described as defaulter”, reported The Economic Times.
The Punjab National Bank (PNB) could be labelled a
defaulter if it does not pay the Union Bank of India about Rs 1,000
crore by 31 March, according to a media report.
PNB
has to settle claims against letters of undertakings (LoUs) issued by it
earlier.
If PNB fails to do so,
the Indian banking sector, already troubled by frauds, will witness
an unprecedented event, where, for the first time, a bank will be
"technically described as defaulter”, reported The Economic Times.
“For us, it’s a genuine claim on PNB backed by documents. It is
not a fraud in our books. We will take the auditor’s view. However, we don’t
want to list PNB as a defaulter. We are expecting some intervention from either
the government or RBI so that there is a resolution by March 31,” Rajkiran Rai,
MD of Union Bank was quoted as saying in the report.
In February, state-owned Union
Bank said it had an exposure of $ 300 million (around Rs 1,915 crore) to the Rs
11,400-crore PNB fraud case, but stressed that its money was safe and
that it would recover it, the PTI had
reported. "The outstanding exposure related to the incident is
approximately $ 300 Million and the Bank is fully secured by LoU /LC /Other
documents and fully confident to receive the payment," said the Union Bank
statement.
The State Bank of India (SBI) too
has an exposure of at least $200 million to the PNB fraud involving Nirav
Modi-helmed companies. SBI, in February, said that it had an exposure of $212
million to the PNB with respect to the fraudulent transactions, but did not
have any direct exposure to Modi. “We don’t have any direct exposure to Nirav
Modi, but we do have some exposure to PNB,” SBI chairman Rajnish Kumar was
quoted as saying by the PTI.
Last week, Union Bank's
shares fell to an over 11-year low after the Central Bureau of
Investigation (CBI) registered a case against a private company for allegedly
cheating eight banks, including the Union Bank, of 13.94 billion rupees. The
CBI registered a case against
Hyderabad-based Totem Infrastructure and its directors post a Union Bank
complaint, which said the lender had been cheated of about 3.14 billion rupees.
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