Foreign banks’ reaction to the $2 billion PNB fraud, which allegedly involved fake LoUs, is having an impact on financial markets. Foreign banks’ reaction to the $2 billion PNB fraud, which allegedly involved fake letters of undertaking (LoUs), is having an impact on financial markets. These come through foreign funds’ purchases of Indian stocks and bonds, local exporters’ sale of foreign-currency earnings and dollar loans from foreign banks. India is one of the world’s biggest users of trade funding worldwide, according to the ICC Global Survey 2017. Companies use trade funding as a stop-gap measure until they receive delivery of goods or payment from their buyers or sellers.

Source: Mint February 27, 2018 13:52 UTC