PNB fraud grips jewellers: Shares of Gitanjali Gems nosedives nearly 20% as CBI, ED take charge

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Published: February 15, 2018 12:38:40 PM

Shares of Gitanjali Gems nosedived nearly 20% on Thursday as CBI and ED took charge of PNB's Rs 11,400 crore scam alleging Nirav Modi and several other jewellers.

Shares of Gitanjali Gems shed as much as 19.45% to hit a day’s low of Rs 47.2 on BSE. (Image: Reuters)

Punjab National Bank’s one of the biggest banking fraud in India has gripped several jewellers and one of them is Gitanjali Gems. Shares of Gitanjali Gems nosedived nearly 20% on Thursday as CBI and ED took charge of PNB’s Rs 11,400 crore scam. Earlier yesterday, Punjab National Bank said that it has found fraudulent transactions worth about Rs 11,400 crore in the Mumbai branch. On the other hand, shares of Punjab National Bank extended the losses Thursday plunging over 8% amid the heavy trading volumes. Shares of Gitanjali Gems shed as much as 19.45% to hit a day’s low of Rs 47.2 on BSE.

A huge trading volume has been observed in the shares of Gitanjali Gems, as at 12:25 am, more than 2.3 crore shares exchanged hands on both NSE and BSE with about 1.95 crore shares on NSE alone. Following a steep decline in the share prices of Gitanjali Gems, about Rs 135 crore (at day’s low price of Rs 47.2 on BSE) had been washed away from the market capitalisation of the company. Gitanjali Gems held a market cap of Rs 582.4 crore at a share price of Rs 48.75 on BSE.

“Four big jewellers — Gitanjali, Ginni, Nakshatra and Nirav Modi — are under scanner. The CBI and Enforcement Directorate is looking at their arrangements with various banks and end use of money,” PTI reported citing an unidentified bank official. According to a PTI report, a senior official of a Punjab National Bank said there is strict instruction from the finance ministry to all banks that no big fish should go scot-free and no honest borrower is harassed.

Reportedly, the CBI had booked diamond merchant Nirav Modi, his brother, wife and a business partner for allegedly cheating PNB of over Rs 280.70 crore in 2017. Yesterday, the CBI received two fresh complaints from PNB against Modi and a jewellery company alleging fraudulent transactions worth about Rs 11,400 crore, PTI said in a report. The Enforcement Directorate (ED) has registered a money laundering case in connection with the Rs 280-crore cheating of Punjab National Bank (PNB) allegedly by diamantaire Nirav Modi and others, PTI said in a report citing a CBI FIR.

Earlier yesterday, the state-run Punjab National Bank detected a $1.77 billion (about Rs 11,400 crore) scam in a Mumbai branch where billionaire jeweller Nirav Modi was alleged in acquiring fraudulent letters of undertaking (LoUs) to secure overseas credit from other Indian lenders. PNB has suspended 10 officers and referred the matter to CBI for investigation.

According to a PTI report, Financial Services Secretary Rajiv Kumar said the finance ministry has taken proactive steps by asking the lender to report the matter to CBI and Enforcement Directorate (ED) so that action can be taken quickly. “The Bank has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions other banks appear to have advanced money to these customers abroad,” Punjab National Bank said in an exchange filing.

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