Scam-hit PNB says it has transferred 1,415 employees since Feb 19

Out of them, 257 are sub-staff, 437 are clerks and 721 employees are officers

State-owned Punjab National Bank, which is hit by “Letter of Undertaking” fraud, has transferred over 1,400 employees since February 19, 2018 following advisory from Central Vigilance Commission (CVC).

The Delhi-based lender claimed these transfers were made as per prevailing rotational transfer policy of the bank and that these transfers have not affected the branch operations.

Bank has transferred 721 officers, 437 clerks and 257 sub-staff, taking total number of employees being transferred to 1,415.  The media reports of the bank transferring close to 18,000 employees are factually incorrect, PNB clarified.

A PNB executive said these transfers have been made in the wake of advisory from Central Vigilance Commission to adhere to transfer policy of the bank. "Normally every year transfers are made after March to ensure year end work does not suffer. But this time bank has advanced the activity in light of unfortunate events," he said referring to the LoU fraud.    

The working in the branches is going on smoothly and the above transfers are in no way affecting the customer service in the nank, PNB said.

Meanwhile, the bank continues to issues trade finance instruments like LOUs, Letters of Comfort as part of normal business operations. "Now, the control over issuance and monitoring and background checks are more strict," the bank executive said.    

The Punjab National Bank (PNB) fraud has brought forward an instrument used widely in international trade finance, in Asia and other developing countries in Africa and South America. Letter of Undertaking (LoU), also called a Letter of Credit (LC), is essentially a guarantee undertaken by a bank, which assures that irrespective of who carries the negotiable instrument and what happens in between, it would be repaid. The importer takes an LoU, and arranges to pay the client in a currency of choice, typically one of the four major ones – dollar, euro, pound or yen.