PNB and it’s scam is buzzing round the corner. What exactly happened is that Mr. Nirav Modi is a diamond merchant and his business is also situated in different countries apart from India. He went to PNB bank and asked for LOUs (Letter of undertaking). A LOU is just like a guarantee that a bank gives to someone and after representing this one can get the money from another bank.
This time when Nirav asked for LOU the issuing authority told that I will issue you LOU but you have to deposit that amount here. Nirav told that I have been getting this LOU from last many years why you are asking for money this time. So the authority told I will cross check it once and if it would have been issued earlier then I will issue it again. After cross verifying this the issuing authority got to know that the earlier LOU which has been issued are not mentioned anywhere but the amount has already withdrawn.All this happened from Nirav’s company listed in Belgian. They went to banks (axis bank, SBI, Andhra bank) in Belgian showed them the LOU and taken the money.
Banks are supposed to do entry for all these kind of transactions in CBS (common bank software) and SWIFT (Society for Worldwide Interbank Financial Telecommunication). The entry of all these transaction was not mentioned by PNB employee. What will happen next is that PNB will be responsible for all the money which was issued. PNB has to show this (50%) as loss in his balance sheet and last quarter profit of PNB is of only 250 Cr. Scam which happened is of more than 1100 cr. It will create a dent on PNB performance and further downside in shares cannot be ruled out.
All the account holders in PNB bank will not get harmed their money is safe no need to panic.
Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
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