Money woes: Lenders form group to recover Rs 4K cr

Mumbai, May 28: A consortium of 15 banks, mostly state-run lenders which face the prospects of losing about Rs 4,000 crore after three foreign lenders of the troubled jewellery exporter Winsome Diamonds encashed their letters of credit, have formed a core group to monitor the issue on a regular basis.

The core group includes PNB, Bank of India, Central Bank of India and Canara Bank, according to a bank official.

"We have formed a core group to monitor the Winsome account and talk to the promoters. We are regularly monitoring the account and we met even yesterday to take stock of the issue," a senior official of a city-based public sector lender that is part of the core group told PTI today.

It can be recalled that the domestic lenders like Punjab National Bank, which is the consortium leader with around Rs 1,800-crore exposure and other banks had given standby letters of credit (SBLCs) worth over Rs 4,000 crore.

Other banks include Central Bank of India, Bank of India, Union Bank of India, Canara Bank, Vijaya Bank, and IDBI Bank.

They had given SBLCs in favour of international bullion banks like StanChart of London, Standard Bank of South Africa, and Scotiabank, which have encashed these LCs recently after the Mumbai-based firm failed to pay up these foreign banks.

PTI