The Union Finance Ministry has asked four Indian banks in Hong Kong to tighten loan sanction conditions and monitor all loans above Rs.250 crore, reports said on Friday.

Putting several regulatory measures in place, the banks have been asked to reconcile all Letters Of Undertaking (LOUs) that they have issued so far.

While, Public Sector Undertaking (PSU) banks have been directed to appoint special representative or agency to monitor status of all loans above Rs.250 crore.

In the over Rs.11,300 crore Punjab National Bank (PNB) scam, diamond czar Nirav Modi along with his uncle Mehul Choksi used LOUs and Foreign Letters of Credit to raise and rollover the amount over several years before an FIR was lodged by the bank on January 29 and February 14.

The advisory by the finance ministry comes after massive outrage over the scam and fingers being pointed at the ministry too especially after experts concluded that the fraud was overlooked at multiple auditing and regulatory levels, compounding it to a point of no return.