No exposure against PNB LoUs for gems, jewellery clients: Bank of Baroda

The Vadodara-based state lender said that all the LoUs issued by the bank are duly controlled for in the books of the bank

No exposure against PNB LoUs for gems, jewellery clients: Bank of Baroda
Photo: Reuters

New Delhi: The Vadodara-based public sector lender Bank of Baroda (BoB) on Thursday clarified that it has no exposure against Letters of Undertaking (LoUs) issued by state-run Punjab National Bank (PNB) for some of its gems and jewellery sector clients in news and said all such authorisations are "duly controlled".

"The bank has no exposure against LoUs issued by PNB on behalf of some of its gems and jewellery sector clients in news. The bank has due process in place to ensure that all LoUs are duly controlled for in bank's books," BoB said in a regulatory filing.

Clarifying its position in respect of the recent developments in the banking sector regarding the Rs 11,400 crore fraud through unauthorised LoUs of PNB, the Vadodara-based state-run lender said, "It has an exposure of $0.285 million against one LoU issued on behalf of an entity other than its gems and jewellery sector clients, in respect of which FIR has been filed by the said bank."

"We have written re-confirmation that payment will be made on due date." Besides, Bank of Baroda has some direct exposure on the gems and jewellery sector customers under consortium arrangement, it added.

"The bank has also carried an extensive examination of its outstanding LoUs issued. All the LoUs issued by the bank are duly controlled for in the books of the bank. Further, no LoUs were issued by the bank on behalf of the group of companies under reference," it said.

Many banks, including country's largest bank SBI and Allahabad Bank, have their exposures against fraudulent LoUs issued by PNB from one of its branch in Mumbai which in turn was used by diamantaire Nirav Modi and his associate companies to get loans from overseas branches of these banks.

A multi-level probe, including CBI and the Enforcement Directorate, has already been launched from over a week now.

The stock of Bank of Baroda closed 1.65 percent down at Rs 143.20 apiece on the BSE today. 

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