Top executives at fraud-hit PNB misled RBI, CBI alleges

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Top executives at fraud-hit PNB misled RBI, CBI alleges

Senior executives at Punjab National Bank misled the Reserve Bank of India (RBI) in late 2016 over the lender’s handling of the financial messaging system and credit guarantees that were at the centre of a more than $2 billion fraud, the Central Bureau of Investigation (CBI) alleged in a charge sheet filed in court.

PNB, India’s second-largest state-run bank, said earlier this year that two jewellery groups headed by Nirav Modi and his uncle Mehul Choksi had defrauded it of about $2.2 billion by raising credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff at a Mumbai branch over several years.

The PNB staff allegedly did not make note of the fake guarantees sent via the SWIFT financial messaging system in the bank’s core accounting software, leading to the fraud remaining undetected for years.