SBI has no direct exposure to jeweller Nirav Modi: Chairman

The State Bank of India does not have any direct exposure to high profile fraud-accused jeweller Nirav Modi, but the public sector bank does have an "exposure" to the tune of $212 million by way of a Letter of Undertaking issued by the Punjab National Bank, said SBI chairman Rajnish Kumar on Friday.

Kumar said this after inaugurating SBI's Global NRI Centre here. "There is no direct exposure for us, but we have an exposure to the tune of US$212 million, by way of a Letter of Undertaking issued by the PNB," said Kumar, while interacting with the media on the sidelines of the function.
Nirav Modi

Kumar also pointed out that the SBI has "a small exposure to Gitanjali Gems", owned by the uncle of Nirav Modi, Mehul Choksi, "but it is not a point of worry". Kumar praised the manner of "checks and balances" that the SBI has put in place while handling banking business in the gems and jewellery industry.

"The total loans of the SBI is Rs 16 lakh crore, and the exposure to the gems and jewellery business is less than Rs 13,000 crore," said Kumar. He pointed out that the SBI has a "well-structured risk management protocol" wherein job rotation is done with none kept at one particular position for more than three years.

"Close monitoring takes place in certain posts and positions. Trust is vital as banks run on trust, and more importantly it is human beings who run the banks. If there is any breach of trust, there is a process of detection too," added Kumar. He pointed out the various risks associated with the banking system and said there are inbuilt mechanisms to manage the risks.

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