CBI registers fresh case related to Rs 9 crore fraud at PNB branch

Mumbai: Punjab National Bank (PNB) has uncovered more suspected credit guarantee fraud within the Mumbai branch at the centre of a similar alleged scam worth over Rs 12,700 crore, according to a complaint filed with the Central Bureau of Investigation (CBI), reported news agency Reuters.
The alleged embezzlement of around Rs 9.09 crore ($1.40 million) involved executives of a little-known company called Chandri Paper and Allied Products, according to the complaint filed by PNB with the CBI.
The newly uncovered scam raises fresh doubts about whether more such cases involving fraudulent guarantees lurk on the books of PNB, the second biggest state-run lender, or other government-owned Indian banks.
The Reserve Bank of India (RBI) this week barred banks from issuing the letters of an undertaking — the credit guarantee instrument at the heart of the fraud — with immediate effect.
That move followed revelations of what has been dubbed the biggest fraud in India’s banking history, in which billionaire jewellers Nirav Modi and his uncle Mehul Choksi allegedly colluded with bank employees to get fraudulent letters of an undertaking which helped them raise credit of about Rs 12,700 crore from overseas branches of Indian banks.
In the latest case, PNB told the CBI two officials at its Brady House branch in Mumbai “entered into a criminal conspiracy” with the directors of Chandri Paper in April 2017 to fraudulently issue two letters of undertaking for the company to raise the money.
According to the complaint, the same set of bank officials were allegedly involved in both cases.
A PNB spokesperson had no immediate comment, and, Chandri Paper could not immediately be reached for comment, reported Reuters.
The bank’s shares, which have plummeted nearly 40 percent since the first fraud was revealed, were little changed in morning trading on the Bombay Stock Exchange (BSE) on Thursday.