Allahabad Bank and UCO Bank discovered an outstanding exposure of $366.87 million and $411.8 million respectively in the $1.8 billion fraud detected in the Punjab National Bank and added that they were confident of receiving the payment.
On February 14th, Punjab National Bank, the country’s second largest public sector bank, detected a $1.8 billion fraud in their Brady House branch in Mumbai. UCO Bank and Allahabad Bank, among other banks were said to have offered credit based on Letters of Undertaking (LoU) issued by PNB.
In a regulatory filing, Allahabad Bank declared its outstanding exposure to be about $366.87 million and that of UCO Bank to be approximately $411.82 million. Both banks are confident of receiving the payment as the bank is fully secured by LoU documents.
A letter of Undertaking is in effect a guarantee issued by a bank to the branch of other banks based on which foreign branches offer credit to buyers.
Allahabad Bank also purchased some buyers credit assets from Axis Bank extended against PNB Lou as a part of regular international business practice.