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Punjab National Bank’s Board of Directors on Wednesday took a historic decision of honouring Payments on all Letters of Undertaking (LoUs) and Foreign Letters of Credit (FLCs) issued by the bank and maturing on or before March 31,2018.
This decision will lead to settling of 352 LoUs worth ₹ 6500 cr with 7 banks in relation to the recent fraud that was reported by the bank. The bank will also honour all subsequent maturing LoUs and FLCs as and when they are due, a PNB statement said after the Board meeting.
Commenting on the decision, Sunil Mehta, Non-Executive Chairman, Punjab National Bank, said, “In essence, PNB stood by its commitment to honour all bonafide LoUs. This decision of the board sends out a strong message that PNB takes its obligations seriously but does it in a manner that is compliant with the law.PNB board’sdecision will help restore confidence and stability in the larger banking system. We thank all stakeholders who have supported us during this difficult time.”
From the beginning when the fraud was detected and reported to the authorities by Punjab National Bank, the bank had communicated that it has a strong balance sheet to meet any contingent liabilities upon the bank. This measure will ensure that India’s banking system at large has the least possible disruption owing to the unfortunate fraud and banking operations will continue to function smoothly, the statement added.
The Bank’s board also reviewed the progress made on strengthening the SWIFT operating environment in the bank. The first phase of SWIFT integration with CBS will become operational from the first working day of the new financial year for the bank, April 3 2018. The complete integration will be achieved ahead of the April 30th deadline stipulated by the Reserve Bank of India for all banks. The successful integration will be achieved in a record time because of the upgradation of bank’s Core Banking System (CBS) to Finacle 10 across the approximately 7,000 PNB branches. This was completed as of January 26th this year.
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