Exposure of $0.28 mn against one LoU issued by PNB to gems clients: BoB

Public sector Bank of Baroda (BOB) on Thursday clarified it has no exposure against Letters of Undertaking (LoUs) issued by PNB for some of its gems and jewellery sector clients in news and said all such authorisations are "duly controlled".

"The bank has no exposure against LoUs issued by PNB on behalf of some of its gems and jewellery sector clients in news. The bank has due process in place to ensure that all LoUs are duly controlled for in bank's books," BoB said in regulatory filing.

Clarifying its position in respect of the recent developments in the banking sector regarding the Rs 114 billion fraud through unauthorised LoUs of Punjab National Bank, BoB said, "It has an exposure of $0.285 million against one LoU issued on behalf of an entity other than its gems and jewellery sector clients, in respect of which FIR has been filed by the said bank."

"We have written re-confirmation that payment will be made on due date."

Besides, Bank of Baroda has some direct exposure to the gems and jewellery sector customers under consortium arrangement, it added.

"The bank has also carried an extensive examination of its outstanding LoUs issued. All the LoUs issued by the bank are duly controlled for in the books of the bank. Further, no LoUs were issued by the bank on behalf of a group of companies under reference," it said.

Many banks, including country's largest bank SBI and Allahabad Bank, have their exposures against fraudulent LoUs issued by PNB from one of its branches in Mumbai which in turn was used by diamantaire Nirav Modi and his associate companies to get loans from overseas branches of these banks.

A multi-level probe, including CBI and the Enforcement Directorate, has already been launched for over a week now.

The stock of Bank of Baroda closed 1.65 per cent down at Rs 143.20 apiece on the BSE today.