Investigators to quiz Indian bank chiefs over $2bn fraud

Bloomberg

Federal investigators are seeking to question the chiefs of India’s biggest lenders as they widen their probe into the $2 billion fraud at Punjab National Bank.
The Enforcement Directorate has written to the heads of 31 banks asking to meet officials about the fraud, according to people familiar with the matter. The investigators will start with state-run PNB on Wednesday and will subsequently cover the other lenders, the people said, asking not to be identified as the details are private.
Separately, the Serious Fraud Investigation Office has summoned Chanda Kochhar, chief executive officer at ICICI Bank Ltd., and Shikha Sharma, her peer at Axis Bank Ltd., for a meeting, CNBC TV18 reported. Both private lenders reportedly have exposure to at least one of the two jewellers that allegedly masterminded the fraud.
“Just being summoned by the authorities doesn’t suggest that all these banks have colluded in the alleged fraud,” said Pooja Dutta, a managing partner at Mumbai-based law firm Astute Law. Authorities are seeking clarity and “are leaving no stone unturned in building up a case without any loopholes,” she said.
The stock exchange has sought clarification and is awaiting a reply from ICICI Bank and Axis Bank, it said on its website. PNB, Axis and ICICI didn’t immediately reply to emails sent by Bloomberg. A text message to ED Director Karnal Singh was unanswered. Calls to SFIO Director Amardeep Singh Bhatia went unanswered.
The fraud was disclosed about a month ago, when PNB alleged that the jewellers colluded with some PNB officials to get fake letters of undertaking, which they used to obtain loans from the overseas branches of Indian banks. Investigators claim the scam had been
running since 2011 and involves multiple regulatory infractions, leaving a web of lenders embroiled in questions about the quality of their compliance.
Shares of ICICI Bank tumbled 2.7 percent to a four-month low in Mumbai on Tuesday. PNB dropped 2.3 percent and Axis Bank fell 1.4 percent, pushing the 10-member S&P Bankex Index to its fifth day of declines.

India expects to receive $1.5bn dividend from RBI
Bloomberg

India’s government expects to receive 100 billion rupees ($1.5 billion) as interim dividend from the Reserve Bank of India this month, people with knowledge of the matter said.
The amount has been calculated for the six month through Dec. 31, the people said asking not to be identified as the information is private. Reserve Bank of India’s financial year runs from July to June.
The Reserve Bank had earlier declined requests from the government for an additional payment after the dividend payout dropped to a five year low. Prime Minister Narendra Modi’s administration is seeking additional funds following a plan to boost spending and shore up support ahead of 2019 federal elections widened the government’s fiscal deficit goal. Finance Minister spokesman D.S. Malik was not immediately available for a comment while RBI spokesman Jose Kattoor did not reply to an email seeking comment.