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YES Bank confirms 'nil' exposure to entities involved in jewellery fraud

The Union Bank was among other banks that were said to have offered credit based on Letters of Undertakings (LoUs) issued by PNB

IANS  |  Mumbai 

Yes Bank
Photo: Twitter (@yesbank)

Following the recent developments in the Indian banking sector, the private sector on Friday said it has "nil exposure" to the entities that were associated with the fraud in the

The $1.8 billion fraud was detected by the second largest public sector bank Punjab National Bank (PNB) in one of its branches in Mumbai on February 14 for which billionaire diamond trader was accused, along with his wife Ami, brother Nishal Modi and uncle Mehul Choksi, chairman, Geetanjali Group.

"would like to confirm that it has nil exposure to the entities or affiliates mentioned in the media reports on the subject specific fraud in the gems and jewellery sector," the bank said in a regulatory filing to the BSE.

Late on Thursday evening, state-run Union Bank of India informed the BSE that it has an outstanding exposure of about $300 million in the fraud detected by PNB; however, the former was also confident of receiving the payment.

The Union Bank was among other that were said to have offered credit based on (LoUs) issued by PNB.

"The outstanding exposure related to the incident is approximately $300 million and the bank is fully secured by LoU/LC/other documents and fully confident to receive the payment," it said in a regulatory filing.

An LoU is in effect a guarantee issued by one bank to the branches of other banks, based on which foreign branches offer credit to buyers.

The lender said that through its foreign branches, it has been taking exposure with PNB as counter party under various LoUs issued through authenticated SWIFT.

First Published: Fri, February 16 2018. 16:41 IST