The CBI has detained Vipul Chitalia, Vice-President of Gitanjali Group of Companies, as part of its probe into the Rs. 12,636cr Punjab National Bank fraud.
Chitalia was apprehended at Mumbai airport and brought to the Central Bureau of Investigation office at Mumbai's Bandra-Kurla Complex for questioning, an official said but didn't divulge any other details about Chitalia's alleged role in the fraud.
The Rs. 12,636 crore PNB fraud was allegedly perpetrated by billionaire jeweler Nirav Modi and his uncle Mehul Choksi, the promoter of Gitanjali Gems.
It is alleged that Choksi and Modi got Letters of Undertakings (LoUs) and Foreign Letters of Credit (FLCs) of Rs. 12,636 crore issued in favor of the foreign branches of Indian banks based on fraudulent claims.
The accused officials of PNB did not enter the instructions for these LoUs and in their internal software to avoid scrutiny. They were sent through an international messaging system for banking called SWIFT, which is used to pass instructions among banks globally to transfer funds.
A Letter of Undertaking or a LoU is a guarantee which is given by an issuing bank to the Indian banks having branches abroad to grant a short-term credit to the applicant.
In case of default, the bank issuing the LoU has to pay the liability to the bank that gave the credit along with the accruing interest.
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