March 9, 2018 / 10:00 AM / 14 days ago

India's Union Bank says has $45 million direct exposure to Nirav Modi, Gitanjali firms

MUMBAI (Reuters) - Union Bank of India (UNBK.NS) has direct credit exposure of about 1.2 billion rupees (13.33 million pounds)to companies controlled by jeweller Nirav Modi, and another 1.75 billion rupees ($26.9 million) to Gitanjali group of companies, its chief executive told Reuters on Friday.

FILE PHOTO - A man walks past a City Union Bank branch in Mumbai, India, February 19, 2018. REUTERS/Francis Mascarenhas

Companies belonging to Modi and his uncle Mehul Choksi, who heads the Gitanjali group, have been accused by Punjab National Bank (PNBK.NS) of defrauding the bank of over $2 billion. The bank alleges firms controlled by the duo colluded with rogue PNB staff to secure fraudulent guarantees that were used to raise credit from overseas branches of Indian banks.

Both Modi and Choksi have denied wrongdoing, and so have two key accused PNB employees in the case, which has so far led to 19 people being arrested.

The latest Union Bank figures are separate from the $300 million exposure it had previously reported on account of the fraudulent PNB guarantees, said Rajkiran Rai, Chief Executive of state-run Union Bank.

This week, the Central Bureau of Investigation (CBI) filed a new complaint against jeweller Modi alleging that companies he controlled had misused even legitimate loans and guarantees.

    Lenders including Union Bank have recalled loans to Modi’s and Choksi’s firms after the news of the fraud, according to the authorities.

    Reporting by Devidutta Tripathy; Editing by Euan Rocha & Shri Navaratnam

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