{"id":31692,"date":"2018-02-28T06:42:23","date_gmt":"2018-02-28T11:42:23","guid":{"rendered":"http:\/\/olduvai.ca\/?p=31692"},"modified":"2018-02-28T06:42:23","modified_gmt":"2018-02-28T11:42:23","slug":"indian-banks-face-crippling-credit-crunch-as-pnb-scandal-worsens","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=31692","title":{"rendered":"Indian Banks Face Crippling Credit Crunch As PNB Scandal Worsens"},"content":{"rendered":"
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Indian Banks Face Crippling Credit Crunch As PNB Scandal Worsens<\/a><\/span><\/h3>\n<\/div>\n
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The biggest financial fraud in India’s history just got bigger.<\/strong><\/p>\n

On Monday, Punjab National Bank disclosed that a fraud previously believed to be $1.7 billion had swollen to $2 billion as the true extent of the fraud is still coming into focus.<\/p>\n

But the impact that this now-$2 billion fraud<\/a> has had on the shares of PNB and other state-run Indian banks is having a wide-ranging impact across the country’s financial system, according to Bloomberg.<\/a><\/p>\n

Foreign banks, worried about the systemic lapses that the scandal has exposed, have become unwilling to lend money to smaller Indian firms – causing massive disruptions in trade finance. All of this pressure has hammered the Indian rupee, which is on track for its first monthly drop since September. This is largely because India’s economy, like the US<\/a>, runs a trade deficit, and depends on capital inflows to function.<\/p>\n

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Foreign capital comes through foreign funds\u2019 purchases of Indian stocks and bonds, local exporters\u2019 sale of foreign-currency earnings and dollar loans from foreign banks. India is one of the world\u2019s biggest users of trade funding worldwide,<\/strong> according to the ICC Global Survey 2017.<\/p>\n

The fraud was purportedly masterminded by Nirav Modi and his uncle Mehul Choksi, both of whom are on the run.<\/p>\n

The two men worked with a PNB employee named Gokulnath Shetty, who recently retired. Shetty would issue fraudulent letters of undertaking to help companies create by Choksi and Modi apply for loans through the foreign branches of other Indian banks. The fraud continued as, when it came time to repay the loans, Shetty would issue still more LoU’s to cover the balance.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Indian Banks Face Crippling Credit Crunch As PNB Scandal Worsens The biggest financial fraud in India’s history just got bigger. On Monday, Punjab National Bank disclosed that a fraud previously believed to be $1.7 billion had swollen to $2 billion as the true extent of the fraud is still coming into focus. But the impact […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,950,422,18708,4318],"class_list":["post-31692","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-fraud","tag-india","tag-punjab-national-bank","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31692","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31692"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31692\/revisions"}],"predecessor-version":[{"id":31693,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31692\/revisions\/31693"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31692"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31692"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31692"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}