SynopsisThe country’s largest lender has sent a letter to six banks, including HDFC Bank and ICICI Bank, where Agrani Bank has nostro account – or, a foreign-currency account that a lender holds in another bank overseas. ET has reviewed a copy of the letter.
The country’s largest lender has sent a letter to six banks, including HDFC Bank and ICICI Bank, where Agrani Bank has nostro account – or, a foreign-currency account that a lender holds in another bank overseas. ET has reviewed a copy of the letter.
“This is the first time an Indian bank has sought attachment of bank accounts of a foreign lender in a recovery case,” an SBI executive said.
SBI had last week secured a judgement from a debt recovery tribunal, Jabalpur, Madhya Pradesh, against the Dhaka-based state-owned lender. The next hearing is scheduled on January 18, 2021.
“In compliance of the said order dated December 8, 2020 with regard to interim attachment of ‘Nostro accounts’ of Agrani Bank, please do not permit/allow the withdrawal of funds, transfer, alienation and creation of third-party interest in the Nostro bank accounts of Agrani Bank detailed therein,” SBI said in its letter to six banks.
The bank executive quoted above said Agrani Bank had issued letters of credit (LoCs) in favour of Amar Knitting Works against whom SBI had initiated recovery proceedings. When SBI sought to discount the LoCs, Agrani Bank did not honour them. “Agrani Bank failed to honour the LoCs and subsequently we filed a recovery case,” the executive said.
LoC is used extensively to facilitate trade between two parties at both domestic and international level. The LoC issuing bank guarantees the payment to the supplier.
In its submission before the recovery court, SBI said it had issued demand notice to Agrani Bank but that the latter did not respond.
“Agrani Bank had earlier written to us that it only made partial payment due to non-execution of full export deal by the drawee,” the SBI executive said, adding that the DRT had, however, noted in its judgement that the onus to honour the LOCs was on issuing bank.
Emails sent to SBI and Agrani Bank seeking comments remained unanswered as of press time Wednesday.