India-based UCO Bank and Allahabad Bank said they have outstanding exposure of about US$411.8 million and US$366.9 million, respectively, in a fraud scheme discovered at Punjab National Bank.

UCO Bank said Feb. 17 that its Hong Kong branch granted loans against letters of credit issued by Punjab National Bank. The applicants for the letters of credit include a few of corporate clients associated with the recent fraud, the lender added.

Meanwhile, Allahabad Bank said Feb. 16 that it has exposure with Punjab National Bank through its foreign branches as counterparty under various letters of undertakings, or LOUs. It has also purchased some buyers' credit assets from Axis Bank Ltd. extended against the LOUs through risk participation as part of normal international business practice.

Both lenders noted that they are "fully confident" of receiving payment from Punjab National Bank, with Allahabad Bank saying it is "fully secured" by its LOUs.

On Feb. 14, Punjab National Bank detected US$1.77 billion of "fraudulent and unauthorized" transactions at one of its branches in Mumbai and has reported them to law enforcement agencies.

Union Bank of India previously admitted having outstanding exposure of about US$300 million, while Axis Bank said it has sold its exposure, Reuters reported.