Post-scam, RBI stops issue of LoUs

The decision to discontinue the practice of Letters of Undertakings and Letters of Comfort for trade finance comes into force with immediate effect, says the RBI

Updated - December 01, 2021 12:36 pm IST - Mumbai

K T Jagannathan

K.T. Jagannathan

In the wake of an escalating controversy over the Nirav Modi-centred scam at the Punjab National Bank (PNB), the Reserve Bank of India (RBI) has decided to discontinue the practice of providing guarantees by issuing letters of undertaking (LoUs) and letters of comfort (LoCs) for trade credits for imports to India.

The action comes into immediate effect. The decision will apply to AD (authorised dealer) category-I banks.

The PNB said the fraudulent transactions had resulted in a loss of over ₹12,600 crore.

Published - March 13, 2018 07:17 pm IST

Collection - 36 stories

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Post-scam, RBI stops issue of LoUs

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A view of the Punjab National Bank (PNB ) at the Parliament Street in New Delhi on February 15, 2018. In what could be one of the biggest frauds in the Indian banking system, state-run lender Punjab National Bank (PNB) reported unauthorised transactions worth Rs. 11,500 crore in one of its branches.
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A view of the Punjab National Bank (PNB ) at the Parliament Street in New Delhi on February 15, 2018. In what could be one of the biggest frauds in the Indian banking system, state-run lender Punjab National Bank (PNB) reported unauthorised transactions worth Rs. 11,500 crore in one of its branches.
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State-owned Punjab National Bank has said in a statement that fraudulent transactions totaling $1.8 billion had been discovered in its Brady House branch in Mumbai.

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A view of the Punjab National Bank (PNB ) at the Parliament Street in New Delhi on February 15, 2018. In what could be one of the biggest frauds in the Indian banking system, state-run lender Punjab National Bank (PNB) reported unauthorised transactions worth Rs. 11,500 crore in one of its branches.
Photo: R.V. Moorthy

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Jaitley hints at tightening of laws

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The Samudra Mahal Building which houses the residence of Nirav Modi, in Mumbai. File

PNB fraud: ED attaches Nirav Modi group property worth ₹523 crore

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Punjab National Bank (PNB) is the second largest lender of the country.

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A Punjab National Bank ATM.

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