How state-owned banks function: An explainer of PNB financial fraud

There are no clear regulations and guidelines on how much collateral should be guaranteed as against a loan

The following explainer and points have been pieced together after conversations with employees of public sector banks. They are lifers who started young with these banks, rose up the ranks, raised families and built homes with PSB salaries and pensions. They know the ins and outs of how these banks work, never in a vaccum, but under pressure from the government which owns them, and intense competition from private banks. This part is on how a fraud regarding Letters of Undertaking (LoUs) could have occurred, not necessarily how Nirav Modi and Mehul Choksi carried it out.

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