Court denies bail to retired bank official in PNB scam case

A special court here on Saturdaydenied bail to retired bank official Gokulnath Shetty, a keyconspirator and prime accused in the Punjab National Bank(PNB) scam case.

Shetty was arrested in March 2018 for allegedlyplaying a key role in the Rs 13,700-crore loan fraud whileworking as a deputy manager at PNB's Brady House branch inMumbai.

Special judge for cases under the Prevention of MoneyLaundering Act (PMLA) V C Barde rejected Shetty's bail plea.

The scam came to light when jewellery firms of primeaccused Nirav Modi and Mehul Choksi approached the Brady Roadbranch of the PNB in January 2018, seeking Letters ofUnderstanding (LoU) for payment to suppliers.

The bank realised that LoUs were being issued to thesefirms fraudulently for seven years by bypassing its corebanking system, and Shetty was allegedly instrumental in this.

An LoU is a guarantee given by the issuing bank tooverseas branches of Indian banks to grant short-term creditto an applicant, and in case of loan default, the bank issuingthe LoU has to honour the liability.

Efforts are on to bring back Modi and Choksi to Indiafrom abroad to face trial in the case, which is being probedby the Enforcement directorate and CBI.