PNB fraud: Allahabad Bank has $366.87 mn outstanding exposure

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Kolkata, Feb 16 (IANS) State-run Allahabad Bank on Friday said it has an outstanding exposure of about $366.87 million in the $1.8 billion fraud detected by another public sector bank PNB, but added it was confident of receiving the payment.

Punjab National Bank (PNB), the country’s second largest public sector bank, had detected the $1.8 billion fraud in one of its branches in Mumbai.

Allahabad Bank was among other banks that were said to have offered credit based on Letters of Undertaking (LoU) issued by PNB.

“The outstanding exposure related to the incident is approximately $366.87 million and the bank is fully secured by LoU documents and fully confident to receive the payment,” it said in regulatory filing.

The lender said it, through its overseas branch in Hong Kong, has been taking exposure with PNB as counter party under various LoUs issued through authenticated SWIFT message.

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An LoU is in effect a guarantee issued by one bank to the branches of other banks, based on which foreign branches offer credit to buyers.

The bank has also purchased some buyers’ credit assets from Axis Bank extended against PNB LoU through risk participation as a part of normal international business practice.

Another public sector bank Union Bank of India had also said it has an outstanding exposure of about $300 million.

–IANS

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