Bank Fraud Fallout in India Spreads to Market for Trade Finance

Gold Silver Reports – Bank Fraud Fallout in India Spreads to Market for Trade Finance — The fallout from India’s biggest banking fraud is spreading to the market for trade financing, as foreign lenders become more reluctant to accept the guarantees from their local counterparts that underpin the loans.

PSU Bank SharesCitigroup Inc., Deutsche Bank AG, Standard Chartered Plc and HSBC Holdings Plc are among banks reducing exposure to these transactions, used by smaller companies to access short-term dollar funding, said people with knowledge of the matter. As questions are raised about the creditworthiness of guarantees from Indian state-run banks, rates have risen by as much as 0.5 percentage point for some types of financing, the people said, asking not to be identified as the details are private.

Read More: Punjab National Bank Extends Losses – Goldman Neal Bhai Reports – INDIA

Foreign banks’ reaction to the $2 billion fraud disclosed by Punjab National Bank two weeks ago, which allegedly involved fake letters of guarantee, is having an impact on financial markets. Signs that trade credit is getting tougher for smaller firms have hurt the rupee, which is among Asia’s worst performers this month and is poised for its first monthly loss since September.

Read More: PSU Bank Shares Fall Led By Punjab National Bank

Big Indian companies, which have direct access to funding from foreign lenders and don’t rely on interim guarantees, aren’t affected by the slowdown, the people said.

Spread the love

Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

Leave a Comment