You are here: Home » Finance » News » Banks
Business Standard

SBI discloses Rs 13.6-bn exposure in LoU issued by PNB to Nirav Modi

SBI Chairman Ranjish Kumar said the bank has some exposure on Gitanjali Gems, owned by Mehul Choksi, uncle of Nirav Modi

Nirav Modi Scam At Pnb

Press Trust of India  |  Kochi 

Peer review to keep SBI bosses on toes

Countrys largest lender SBI today said it has an exposure of USD 212 million (about Rs 1,360 crore) in respect to letter of undertaking issued by Punjab National Bank to Nirav Modi, but does not have any direct exposure to the absconding jewellery designer.

"We dont have any direct exposure on Nirav Modi but we do have some exposure on Punjab National Bank", State Bank of India Chairman Rajnish Kumar told reporters here today.

He said the bank has lent USD 212 million to Modi on the basis of LoU issued by PNB.

Kumar, however, said the bank has some exposure to Gitanjali Gems, owned by Mehul Choksi, uncle of Nirav Modi.

Our exposure to Gitanjali is small we and we are not worried, Kumar said.

When asked about the lender's exposure to the entire gems and jewellery sector, he said it is less than 1 per cent of the total domestic loan book.

My domestic loan book is Rs 16 trillion and gems and jewellery sector exposure is less than Rs 130 billion which is less than 1 per cent, he said.

He said the bank is very careful as far as gems and jewellery industry is concerned and has been taking steps to put lot of risk mitigation measures for accounts from the sector.

He said SBI has an elaborate system of risk management and internal audits and the robustness of that system is very well recognised.

One of the risk management practise which we follow is job rotation. We dont keep a person for more than three years at one position. There are certain positions which are very sensitive and we monitor those positions very closely, Kumar said.

He said the Swift system and the core banking system in SBI are integrated.

He said banking is a risky business and risks are of various natures such as credit risks, operational risks, market risks and foreign currency risks.

Operational risk is always an unknown risk. Credit risk a calculated risk ... you know during the appraisal about the probability of default, he said.

need to manage the risks by creating awareness about the risks, having standard operating procedures, strict compliance of these procedures and having a strong oversight.

Ultimately, we are human beings who do the transactions and run on the trust. But, if there is a breach of trust by any individual, you have to have a process for detections, he said.

Review of the risk assessment processes and plugging the gaps should be a continuous process need to do.

Talking about Axis Bank selling exposure, he said, They might have sold to other banks but whether we have bought or any other bank has bought, ultimately the exposure is on the bank which has issued the letter of undertaking.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, February 16 2018. 15:32 IST