Govt to infuse Rs 30.5 billion as fresh capital in Allahabad Bank

Public-sector lender Allahabad Bank on Thursday informed stock exchanges that it had received a communication from the finance ministry stating it was getting a capital infusion to the tune of Rs 30.54 billion.
"...the Bank has received a communication from the Government of India, Ministry of Finance, Department of Financial Services regarding fresh capital infusion of Rs 30.54 billion towards contribution of the central government in the preferential allotment of

equity shares (Special Securities/Bonds) of the bank during the financial year 2018-19, as the government's investment," Allahabad Bank said in a letter to the BSE.
It had been reported last week that the finance ministry would likely finalise the second round of capital infusion into public-sector banks (PSBs) towards the end of this month, taking into account the latest quarter's performance. In this round of fund infusion, most of the banks would get growth capital for expanding their lending, particularly to micro, small and medium enterprises (MSMEs).
The ministry had earlier this year provided capital infusion of Rs 113.36 billion to five PSBs to help them meet their interest payment commitments.
Punjab National Bank (PNB), hit by the Nirav Modi scam, had received Rs 28.16 billion, while Allahabad Bank had got Rs 17.9 billion. Andhra Bank had got a capital support of Rs 20.19 billion, Indian Overseas Bank of Rs 21.57 billion and Corporation Bank of Rs 25.55 billion. The infusion was part of the remaining Rs 650 billion out of Rs 2.11-trillion capital infusion planned over two financial years.

Nirav Modi scam: PNB, Allahabad Bank may decide on action against EDs, MD

Punjab National Bank and Allahabad Bank may take a call on further action to be taken against two executive directors and the MD chargesheeted in the Rs 140 billion Nirav Modi fraud case, sources said.
Soon after Central Bureau of Investigation (CBI) filed chargesheet in May pointed involvement of top officials of banks, PNB's board decided to divest two executive directors of all powers.
ALSO READ: Lead bank must play key role for quick decisions, says PNB MD Sunil Mehta
According to the sources, PNB's Board is scheduled to meet tomorrow and decide about future course of action against its two executive directors K V Brahmaji Rao and Sanjiv Sharan.
The Allahabad Bank too would follow the suit, they said.
The CBI in its first chargesheet in the country's biggest financial by billionaire jeweller Nirav Modi also detailed the alleged role of the PNB's former chief Usha Ananthasubramanian, who is now Allahabad Bank CEO and MD.
ALSO READ: Scam-hit PNB nets Rs 1.5 billion in FY18 as below minimum balance penalty
The board of Allahabad Bank divested Ananthasubramanian from all her functional responsibilities after the first chargesheet in May itself.
Experts feel that since the charges are restricted to procedural lapses without any criminal intent, board will take a decision in that light.
It is also noted that PNB has claimed that it did not receive an important e-mail on preventing bank frauds, which was sent by the Reserve Bank of India (RBI).

ALSO READ: Allahabad Bank branch in Hong Kong to face increased scrutiny from HKMA
The directive, issued on November 30, 2016, mandated all commercial banks in the country to strengthen their risk control mechanisms to ward off banking frauds, was not received by PNB, according to the internal report of the bank.
Nirav Modi and his uncle Mehul Choksi, in connivance with certain bank officials, allegedly cheated PNB of about Rs 140 billion through issuance of fraudulent Letters of Undertaking (LoUs).
A Mumbai branch of PNB had fraudulently issued LoUs for the group of companies belonging to Nirav Modi since March 2011.
ALSO READ: PNB scam: ED accuses Nirav Modi of creating dummy firms in India, abroad
The total number of LoUs issued to the companies of Nirav Modi, his relatives and the Nirav Modi Group are 1,213, and to Mehul Choksi, his relatives and the Gitanjali Group are 377.
With regard to the provision made for the loss incurred on account of Nirav Modi fraud, the bank provided Rs 71.78 billion, 50 per cent of the total amount of Rs 143.56 billion in the fourth quarter of 2017-18.
The remaining amount will be covered in the three quarters of the current finanyear.
PNB paid Rs 65.86 billion to other banks to discharge its liabilities towards Letters of Undertakings (LoUs) and Foreign Letters of Credit (FLCs) issued fraudulently and in unauthorised manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with CBS (Core Banking Solution).

Allahabad Bank discloses Rs 23.6-bn exposure in Rs 114-bn PNB fraud

State-run Allahabad Bank on Friday said it has an outstanding exposure of about $366.87 million (Rs 2360 cr) 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.
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.
($1 = Rs 64.4)
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