PNB won’t seek govt support to tackle Nirav Modi fraud: MD Sunil Mehta
PNB is not seeking government’s help by way of capitalization to tide over the Nirav fraud as it has enough resources and capability to do so, says MD Sunil Mehta
New Delhi: Punjab National Bank (PNB) will take care of problems emanating from Rs13,000-crore fraud perpetrated by billionaire jeweller Nirav Modi on its own and will not seek any government assistance, the bank’s managing director Sunil Mehta said on Monday.
PNB has enough resources and capability to meet the challenges posed by a fraud of this nature, he said. “We said this is problem of the bank and we will solve it ourself. We are not seeking government’s help by way of capitalization,” Mehta said, when asked if the bank has sought help from the majority shareholder to tide over the problem of fraud.
“Government whatsoever they have given in the normal process of the recapitalisation plan. We have not asked for any additional support because we think PNB has capacity and capability to mobilise resources in-house,” he said.
According to Mehta, PNB has mobilized roughly Rs12,000 crore after September 2017.
“We have mobilized Rs5,000 crore through QIP (qualified institutional placement), Rs1,300 crore by selling stake in PNB Housing Finance and Rs5,400 crore through government infusion. We are adequately capitalized to carry forward our business of credit,” Mehta said.
“These mobilized funds, besides Rs1,100 crore of my profit, which the bank earned in three quarters (FY2017-18). That is also providing me cushion. So that profit coupled with this capital will provide me adequate cushion to take care of loss and still continue to grow,” he said.
Nirav Modi and his uncle Mehul Choksi, in connivance with certain bank officials, allegedly cheated PNB of over Rs13,000 crore through fake letters of undertaking (LoUs). A Mumbai branch of PNB had fraudulently issued LoUs for the group of companies belonging to Nirav Modi since March 2011.
Different investigating agencies, including Central Bureau of Investigation (CBI), the Income Tax Department and the Enforcement Directorate, are probing the PNB fraud—the biggest banking scam in India’s history.
PNB had issued as many as 1,590 LoUs to Nirav Modi, Mehul Choksi and their associates. The total number of LoUs issued to the companies of Nirav Modi, his relatives and the Nirav Modi Group are 1,213, and to Mehul Choksi, his relatives and the Gitanjali Group are 377.
Emphasising the long legacy and strength of the bank, Mehta said: “It (PNB) is a 123-year-old institution which was founded during Swadeshi movement by Lala Lajpat Rai. This institution has 7,000 branches spread through length and breadth of the country with business of more than Rs10 lakh crore in the domestic market. So fraud of this nature could not shake confidence of our customers during this period.”
Even during trying times, the bank’s business has grown better than the industry, he said, adding that credit has witnessed a growth rate of about 10%, in line with the guidance that was shared with investors. With regard to deposits, the bank has recorded a growth of 6.2%, he said.
“So, we have grown in line with industry and even during difficult days it was business as usual. With all this negativity which was created in the environment, the customers’ confidence was not lost and the credit goes to 70,000 employees who stood with me in difficult time. They have gone the extra mile, they have done extra hard work to see that every customer is attended to properly. Now, we are in the bounce back mode,” said Mehta.
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