Money & Banking

Nirav Modi scam: PNB Board decides to honour all inter-bank LoU, LoC

K.R.Srivats New Delhi | Updated on March 28, 2018 Published on March 28, 2018

To settle 352 LoUs worth ₹ 6,500 cr

Punjab National Bank’s Board of Directors on Wednesday took a historic decision of honouring Payments on all Letters of Undertaking (LoUs) and Foreign Letters of Credit (FLCs) issued by the bank and maturing on or before March 31,2018.

This decision will lead to settling of 352 LoUs worth ₹ 6500 cr with 7 banks in relation to the recent fraud that was reported by the bank. The bank will also honour all subsequent maturing LoUs and FLCs as and when they are due, a PNB statement said after the Board meeting.

Commenting on the decision, Sunil Mehta, Non-Executive Chairman, Punjab National Bank, said, “In essence, PNB stood by its commitment to honour all bonafide LoUs. This decision of the board sends out a strong message that PNB takes its obligations seriously but does it in a manner that is compliant with the law.PNB board’sdecision will help restore confidence and stability in the larger banking system. We thank all stakeholders who have supported us during this difficult time.”

From the beginning when the fraud was detected and reported to the authorities by Punjab National Bank, the bank had communicated that it has a strong balance sheet to meet any contingent liabilities upon the bank. This measure will ensure that India’s banking system at large has the least possible disruption owing to the unfortunate fraud and banking operations will continue to function smoothly, the statement added.

The Bank’s board also reviewed the progress made on strengthening the SWIFT operating environment in the bank. The first phase of SWIFT integration with CBS will become operational from the first working day of the new financial year for the bank, April 3 2018. The complete integration will be achieved ahead of the April 30th deadline stipulated by the Reserve Bank of India for all banks. The successful integration will be achieved in a record time because of the upgradation of bank’s Core Banking System (CBS) to Finacle 10 across the approximately 7,000 PNB branches. This was completed as of January 26th this year.

Published on March 28, 2018

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.