The Punjab National Bank (PNB) reported on Wednesday fraudulent transactions worth Rs 11,360 crore from a single branch in Mumbai. The scam linked to billionaire jeweller Nirav Modi is equal to one-third of PNB’s total market capitalisation.

New reports indicate an additional Rs 3,000 crore money laundering from 17 other banks. Sources say that the money was loaned to various firms of Nirav Modi, including his flagship company Firestar International Ltd. Some of the banks exposed to the scam are Central Bank of India (Rs 194 crore), Dena Bank (Rs 153.25 crore), Vijaya Bank (Rs 150.15 crore), Bank of India (Rs 127 crore), Syndicate Bank (Rs 125 crore), Oriental Bank of Commerce (Rs 120 crore), Union Bank of India (Rs 110 crore) and IDBI Bank and Allahabad Bank (Rs 100 crore each), according to The Indian Express.

These banks, individually and as a consortium, lent Rs 1,980 crore to Firestar International. The data shows fraudulent transaction as on June 2015, the most recent date for which data is available.

Additionally, these banks also issued another Rs 500 crore in “non-fund based facilities” such as guarantees or LoUs to Modi’s company. Of this, 90% has been repaid.

On Friday, the country’s largest lender, State Bank of India, said that it has an exposure of about Rs 1,360 crore in respect to letter of understanding issued by PNB to Modi. However, it reported that the bank does not have any direct exposure to the jewellery czar’s money laundering.

SBI Chairman said that the bank has some exposure to Gitanjali Gems too, which is owned by Modi’s uncle Mehul Choksi.

SBI is already coping with losses. For its last quarter that ended on December 2017, the bank had registered a loss of Rs Rs 2,416.4 crore – the main contributor being bad loans or NPAs.

Tip of the iceberg

Reuters conducted its own investigation to find how much trouble the country’s banks are in. It discovered that India’s fraud problems extend far beyond the Nirav Modi scam.

The international media portal obtained Reserve Bank of India (RBI) data through a Right To Information (RTI) application which showed state-run banks have reported 8,670 “loan fraud” cases totalling Rs 61,260 crore.

According to the data, bank loan frauds in 2012-13 amounted to Rs 6,357 crore and this reached Rs 1,7634 billion in the latest financial year.

“This might be the tip of the iceberg or the middle, and that is the worry,” said Pratibha Jain to Reuters. He is partner at law firm Nishith Desai Associates, who advises on bankruptcy cases.

“The fact is we don’t know what else is out there.”

In June last year, the RBI revealed that only 12 accounts are responsible for about 25% of bad loans. The gross bad debt that plagues India’s banking system as of March 2017 was at Rs 7.11 lakh crore, according to Business Standard.

However, even this isn’t accurate as not all cases of fraud are reported to the RBI, only the ones amounting to Rs 1 lakh or more.

In the RTI, Reuters sought data from 20 of India’s 21 state-run lenders and obtained 15 replies. In terms of the total number of bank fraud cases, PNB topped the list with 389 cases (Rs 6,562 crore) in the last five financial years.

Banks that followed PNB were – Bank of Baroda with 389 cases (Rs 4,473 crore) and Bank of India with 231 cases (Rs 4,005 crore) in the same time period.

SBI reported 1,069 loan fraud cases but did not disclose the amount.

In October last year, the Union government unveiled a plan to infuse Rs 2.11 lakh crore into the country’s NPA-swamped public-sector banks (PSBs) over two years to boost credit and spending. This recapitalisation plan includes Rs 80,000 crore worth of recapitalisation bonds for 2017-18 and Rs 8,139 crore as budgetary support.

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