BANK AUDIT - ILLUSTRATION NON FUNDED FACILITIES

Illustration: For Non funded Facilities

 

Fill the following types of facities availed by Borrower Mr. Nirav in below example given:

 

1. Letter of Undetaking

2. Letter of Comfort

3. Bank Guarantee

4. Letter of Credit

5. Buyer's Credit

6. Seller's Credit

 

Example:

 

1. Mr. Nirav, a diamond dealer, imprter/exporter, has availed a non fund based facility in his firm from PNB, Mumbai and thus issued a __ to undetake a diamond cutting contact from a surat based firm mehul & co.

 

2. On. 1.4.22, He visited PNB with a need to import diamonds from china firm abc inc. and requested to issue___to china firm's bank.

 

3. On 1.7.22, He, with a need to import diamonds from dubai, thought to get__, being a cheaper finance option from dubai pnb overseas branch. And thus requested pnb, mumbai to issue_.

 

4. On 1.10.22, He, with a need to import diamonds from singapore, thought to get__ from sbi overseas branch. And thus requested pnb, mumbai to issue_.

 

5. For availing all above 4 non fund based facilities from pnb, mumbai, Nirav set 5 employees of pnb, mumbai and paid a bribe of 50L to each staff and requested not to record these facilities in branch CBS system or in branch records and also requested not to demand any colletral secu. for any facility.

 

6. Pnb staff, made funds trfd on demand in all 4 cases as above by logging into the swift system of the branch.

 

7. On 31.12.22, after 3month investigation by vigilence team, all 5 staff were terminated from branch and new manager appointed in branch called and asked Nirav to provide sufficient collaterals for all facities.

 

8.  Under Which clauses of LFAR, the above lapses are to be reported as found by an SBA during audit in branch?