Nirav Modi scam involving fraudulent LoUs a systemic issue, says Meera Sanyal

Punjab National Bank (PNB), India's second largest public sector bank, is in the eye of a storm after fugitive diamataire Nirav Modi swindled it of over Rs 12,000 crore by raising fraudulent letters of undertaking (LoUs).

Meera Sanyal, former CEO & Chairman, Royal Bank of Scotland said raising fraudulent LoUs is a systemic issue.

There is nothing wrong with LoUs per se, but in the case of PNB, certain departments, which are prone to fraud, have been exploited by fraudsters, she said.

"The question is, have all the LoUs issued by PNB resulted in losses to the bank? In that case, it has to be assumed that there were several officials at PNB who have colluded with Nirav Modi to swindle the money from the bank," Sanyal added.