Since the Rs 14,000 crore Punjab National Bank fraud committed by diamantaire Nirav Modi and Mehul Choksi was uncovered, the overall buyers’ credit has shrunk by 1.72 lakh crore ($25 billion), Business Line reported.
According to data compiled by a trade finance firm buyerscredit.in, the overall outstanding buyers’ credit (OBC) stood at Rs 3.43-lakh crore ($49.4 billion) as of June 2018, compared to Rs 5.15-lakh crore ($74.21 billion) as of June 2017, the report said, adding that State Bank of India, Bank of India and Bank of Baroda have been hit the most.
“There is a big gap in financing, and trade finance of less than $1 million is hardly taking place, which is a big problem for small and medium enterprises,” Sanjay Mandavia of buyerscredit.in was quoted in the report.
PNB scam accused Nirav Modi and Mehul Choksi allegedly used letters of undertaking (LoUs) and letters of comfort (LCs) to make the transactions worth Rs 14,000, as a result, the Reserve Bank of India (RBI) prohibited the banks from issuing them. Prior to the ban, the outstanding buyers’ credit was about $91 billion, it added.
First Published: IST