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The Reserve Bank of India (RBI) has advised Punjab National Bank (PNB) to pay up dues to banks for claims against letters of undertakings (LoUs) and also sought a detailed report on what happened between 2011 and now.
Moving into damage control mode after the LoU fraud amounting to Rs 114 billion, the banking regulator also asked all lenders to tighten their monitoring of such LoUs and enhance due diligence in issuing these letters of comfort and non-fund based activities. A top executive at a Mumbai-based public sector bank said the RBI had communicated that PNB would have to honour
