Punjab National Bank asked billionaire diamantaire, Nirav Modi, to present a concrete and implementable plan to settle losses incurred by the lender.
Letters of Undertaking were issued illegally to Modi by a few bank officials and were an apparent violation of the Foreign Exchange Management Act, PNB wrote in a letter to Modi, reviewed by BloombergQuint. On Feb. 14, India's second-largest state-owned lender had disclosed that it had detected a $1.77 billion scam, linked to fraudulent LoUs.
You were getting LoUs issued illegally and in an unauthorized way through few bank officials. At no stage such facilities were extended by our bank to the 3 partner firms.PNB's Feb. 22 Letter To Nirav Modi
Also Read: Scam-Hit PNB Is Said to Bank on Bhushan Sale for Capital Boost
“As required by law, the bank was compelled to bring these activities to the notice of law and enforcement agencies, which the bank did,” said PNB.
Earlier, Modi had written to PNB saying that his ability to repay the dues by selling his flagship firm, Firestar Diamonds, was jeopardised by the search and seizure operations triggered by the bank's “anxiety” to settle the issue.
Last week, PNB's Chief Executive Officer Sunil Mehta had said that the bank had received some “vague offers” for repayment from Modi.
Also Read: Shame on You Crazy Diamond Bankers. PNB Was No Lone Wolf
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