On Wednesday, another shocking bank fraud in the state-owned Punjab National Bank has come to light. The bank said in a regulatory filing that ₹1,203.26 crore borrowal fraud has been detected. The company under scanner is Ahmedabad based Sintex Industries Ltd (SIL)

“Reporting of borrowal fraud of ₹ 1203.26 crore in NPA account of M/s Sintex Industries Ltd (SIL) at Large Corporate Branch at Ahmedabad, Zonal Office, Ahmedabad. This fraud of Rs. 1203.26 crore is being reported by the bank to Reserve Bank of India (RBI) in the accounts of the company. The bank has already made provisions amounting to ₹215.21 crore, as per prescribed prudential norms.”

Sintex, is a textile and yarn maker, is part of Sintex group that makes plastic water tanks. Other bankers of the company include Bank of Baroda, Canara Bank, Punjab and Sind Bank and Bank of India. Its total debt stood at ₹7,157.9 crore as on 31 March, as per reports. 

PNB Scam

In January 2018, massive ₹11,400 crore PNB scam came to light. It relates to the issuing of fraudulent letter of undertaking by the bank to diamond merchants Mehul Choksi and Nirav Modi. Companies of Modi and Choksi allegedly availed credit from overseas branches of Indian banks using the fraudulent guarantees of PNB given through letters of undertaking (LoUs) and letters of credit which were not repaid, bringing liability on the state-run lender. The CBI and ED has registered a case and Nirav Modi was declared Fugitive under the Fugitive Economic Offenders Ordinance. 

An LoU is a guarantee given by an issuing bank to Indian banks having branches abroad to grant short-term credit to the applicant. Nirav Modi, lodged in a UK jail, is accused of being the “principal beneficiary” of the fraudulent issuance of LoUs as part of a conspiracy to defraud PNB and then laundering the proceeds of the crime.