PNB fraud impact: SBI discloses Rs 1,360 crore exposure

The country’s largest lender, State Bank of India, said on Friday it has an exposure of $212 million (about Rs 1,360 crore) with respect to letters of undertaking issued by Punjab National Bank to Nirav Modi, but does not have any direct exposure to the absconding jewellery designer.

“We don’t have any direct exposure on Nirav Modi, but we do have some exposure on Punjab National Bank,” State Bank of India chairman, Rajnish Kumar, said on Friday. He said the bank has lent $212 million to Modi on the basis of an LoU issued by PNB. Kumar also said the bank has some exposure to Gitanjali Gems, owned by Mehul Choksi, uncle of Nirav Modi. “Our exposure to Gitanjali is small, and we are not worried.” Kumar said. SBI’s exposure to the entire gems and jewellery sector is less than 1% of the total domestic loan book.

“My domestic loan book is Rs 16 lakh crore, and gems and jewellery sector exposure is less than Rs 13,000 crore ,which is less than 1%”, he said. Kumar said the bank is very careful as far as the gems and jewellery industry is concerned, and has been taking steps to put a lot of risk mitigation measures for accounts from the sector. “One of the risk management practises which we follow is job rotation. We don’t keep a person for more than three years at one position. There are certain positions which are very sensitive and we monitor those positions very closely.”Kumar said. He said the SWIFT system and the core banking system in SBI are integrated. Commenting on Axis Bank selling its exposure, he said, “They might have sold to other banks but whether we have bought or any other bank has bought, ultimately the exposure is on the bank which has issued the letter of undertaking.”