Punjab National Bank scam: What happened so far in Nirav Modi’s Rs 11,400 crore fraud

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Updated: February 19, 2018 12:04:23 PM

Punjab National Bank (PNB), one of the largest public sector banks in the country, on 14 February notified stock exchanges that “fraudulent and unauthorised transactions” have taken place at one of its branches in Mumbai.

PNB, Punjab National Bank, wilful defaulters, Nirav Modi, Letters of Understanding, PNB employeesOn 15 February, PNB management held a press conference during which it assured that it will honour all the bonafide commitments. (Indian Express)

On 14 Februrary, Punjab National Bank (PNB), one of the largest public sector banks in the country, notified stock exchanges that “fraudulent and unauthorised transactions” have taken place at one of its branches in Mumbai. The notification alleged that some of its account holders have benefitted from the sham transactions with apparent connivance of bank officials. The quantum of such transactions were reported to be nearly Rs 11,400 crore. The PNB shares heavily plunged, as a result. The name of Nirav Modi, a famous diamond merchant, started appearing on prominence thereafter. On 15 February, PNB management held a press conference during which it assured that it will honour all its bonafide commitments. The bank also apprised that all the details related with the matter have already been shared with the law enforcement agencies, and it will ensure all the culprits are booked as per the law of the land. PNB also informed that the main accused i.e. Nirav Modi, has written to the bank about a repayment plan. As things started to unfold, it was learnt that the scam has extended to multiple banks.

Fraud LoUs issued

The bank further reported that on January 29 a complaint was registered by one of its employees with Central Bureau of Investigation (CBI) against three Nirav Modi firms namely Solar Exports, Stellar Diamonds and Diamond R US and four individuals namely diamond merchants Nirav Modi and Mehul Choksi, the managing director of Gitanjali Gems, and two junior bank officials alleging they caused a loss of Rs 280 crore to the bank by generating fake Letters of Undertaking (LoU). On 14 February,  more fraudulent and unauthorised transactions totaling Rs 11,400 crore were discovered at the bank’s Mumbai branch. Later on, investigators found the second scam was also linked to the case filed earlier.

Raids by Enforcement Directorate

Enforcement Directorate (ED) has conducted raids on 21 locations of the firms related to Nirav Modi. ED reported that it has seized diamonds, gold and jewellery worth Rs 5,670 crore. On 18 February, the ED conducted fresh searches at over 45 more locations in 15 cities across India, media reports said. CBI also conducted raids on the offices of jewellery retailer Gitanjali Gems on Friday.

CBI makes arrests

In relation to the PNB-scam, CBI made arrests of Gokulnath Shetty (then deputy manager) and Manoj Kharat (single window operator), the two main accused. CBI on Friday also arrested the third person, Hemant Bhat, who is being seen as the “authorised signatory” of the companies tied to Nirav Modi, as per CBI remand copy.

Court sends accused to custody

On Saturday, a court ordered the three accused to remain under 14-day police custody until 3 March.

MEA suspends passports

On 16 February, MEA suspended passports of Nirav Modi and his uncle and co-accused Mehul Choksi. CBI has also sought Interpol’s help amid reports in several media outlets that the billionaire jeweller Nirav Modi is in New York.

What other banks say

SBI said it has an exposure of $212 million by way of a LoU issued by PNB. UCO Bank said it has an exposure of about $411.82 million. Allahabad Bank said it has an exposure of around Rs. 2,000 crore. Axis Bank said it had dealt in transactions that were guaranteed with LoUs from PNB, but since then such transactions have been sold.

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