On Punjab National Bank Scam: By The Virtue Of Intersection Of Law And Economics

 

• Letter of Undertaking (LOU): In the infamous Punjab National Bank (PNB) scam, fraudulent LOUs were issued by bank officials to secure credit from overseas banks without proper collateral. This led to a loss of over ₹11,000 crore for the bank.
  
  
  
  
  
  
  
• SWIFT Transactions: SWIFT is widely used for international trade. For instance, a company in India importing machinery from Germany might use a SWIFT transaction to securely transfer payment to the German supplier's bank.
  
  
• Nostro Account: An example would be the State Bank of India (SBI) maintaining a Nostro account in USD with a bank in the United States. This account facilitates transactions like remittances or trade settlements in dollars.
  
  
  
  
  
  
  
• Core Banking System (CBS): Banks like HDFC and ICICI in India use CBS to provide seamless banking services. For example, a customer depositing money in one branch can withdraw it from another branch instantly, thanks to CBS.
  
  
• Shell Companies: The Panama Papers leak exposed numerous shell companies used by individuals and corporations to evade taxes or launder money. These companies often existed only on paper and were registered in tax havens.
  
  
  

Reference:

• An Analysis On Punjab National Bank Scam: By The Virtue Of Intersection Of Law And Economics