The key accused in the case have denied any wrongdoing.The Reserve Bank of India (RBI) wrote to all banks a week ago asking for details of the LoUs they had written, including the amounts outstanding, and whether the banks had pre-approved credit limits or kept enough cash on margin before issuing the guarantees, the sources said.One of the sources said the regulator had asked for details of LoUs issued as far back 2011, while another said the deadline for banks to respond was earlier this week. "If there is a problem in one bank, they will be checking the whole system. What's the outstanding? Is it correctly reflecting in the book or not? That kind of thing," said a third source, a senior banker.The RBI did not immediately respond to a request for comment.Importers typically use LoUs issued by their local bank to raise cheaper foreign currency loans overseas to fund purchases.In the case of PNB, bank employees who have been accused of pulling off the fraud in connivance with companies controlled by jewellers Nirav Modi and his uncle Mehul Choksi , allegedly issued LoUs on behalf of the jeweller groups without any pre-approved limit or margin.

Source: Economic Times March 09, 2018 15:22 UTC