Axis Bank on Thursday said it ‘sold down all the buyers' credit transactions’ undertaken by its Hong Kong branch with Punjab National Bank.
India’s third largest private sector sector notified the stock exchanges in this regard in the wake of state-run PNB disclosing that fraudulent and unauthorised transactions aggregating about $1.8 billion was detected at one of its branches in Mumbai.
PNB’s complaint for registration of first information report against accused persons for having committed offences of cheating and fraud, thereby causing a loss to the banks, mentioned that two branch officials from the mid-corporate branch at Brady House, Mumbai, issued letters of undertaking (LoU) in favour of Allahabad Bank and Axis Bank in Hong Kong.
Axis Bank said it is an active participant in the secondary market for buyer’s credit transactions and it has sold “all the referred transactions’’.
The bank elaborated that in the normal course of business, it undertakes, through its overseas branches, transactions against LoUs issued by other banks. The transaction amount is then credited to the LoU issuing bank’s Nostro accounts.
The private sector bank said it has undertaken such transactions in the past with PNB against their authenticated SWIFT LoUs.
PNB appears to be trying to wriggle out of the mess by stating, in a “caution notice to all bank chiefs’’, that ‘none of the overseas branches of India-based banks have shared with us any document/information made available to them by these Indian companies at the time of availing buyers’ credit from them’’.