The Central Bureau of Investigation had requested the Interpol to help in arresting the bank fraudster Nirav Modi who is accused of getting Punjab National Bank (PNB) officials to facilitate huge loans using fake guarantees, at the cost of Rs. 11,300 crore in public money.
Nirav Modi and his business associate Mehul Choksi’s passports have been suspended and could be cancelled if they fail not return to India within four weeks.
Here are the 10 latest developments in this big story:
Raids on Nirav Modi will continue until investigators can seize enough to cover the PNB swindle, sources have told NDTV. In searches since yesterday, the Enforcement Directorate found diamonds, jewellery and gold worth over Rs. 5,600 crore.
The CBI today widened the probe and raided the Gitanjali group of firms led by Nirav Modi’s uncle Mehul Choksi. The agency filed a new case against the Gitanjali group alleging a $763 million (Rs. 4,911.43 crores) fraud.
The scam exploded after a PNB official from Mumbai filed a criminal complaint on January 29 against three companies and four people, including Nirav Modi and Mehul Choksi.
The bank alleged that two junior employees at one branch in Mumbai had helped the companies and people managing them get “letters of undertaking” (LoUs) without having a sanctioned credit limit or maintaining funds “on margin”. The LOUs were used to obtain short-term credit from overseas branches of other Indian banks.
Based on the complaint, the CBI registered a preliminary case against the companies and the people named by PNB. Earlier this week, India’s second biggest government bank told the CBI that the amount was closer to a staggering Rs. 11,300 crore.
PNB was alerted to the mega-fraud when on January 16 a group of companies linked to Nirav Modi presented a set of import documents to the Mumbai branch and requested buyers’ credit to pay overseas suppliers. Since they had no pre-arranged credit limit, the branch official asked the companies to put down the full amount as collateral so the bank could issue LOUs or guarantees. The companies argued that they had used such facilities in the past without keeping any money on margin. The PNB then scanned through records and found no trace of any transactions.
It emerged that two employees had issued LOUs without entering the transactions on the bank’s own system. Such transactions went on for years without detection, PNB said. Banking sources quoted by Reuters say in some banks the SWIFT system used for international transactions, and the core banking system, work independently of each other. In PNB’s case, the outstanding LoUs were not available on the core banking system, so went undetected.
Nirav Modi and the others left India in the first week of January, long before the CBI filed a case. The agency put out a lookout notice against the four on February 3 or 4. The billionaire’s exit has fueled political sparring with the Congress drawing comparisons with Vijay Mallya’s flight out of India.
Nirav Modi, whose designs have been worn by stars in India as well as abroad, was recently seen in a group photo in Davos with Prime Minister Narendra Modi.
Reuters, in an exclusive report based on Right To Information data from the Reserve Bank of India (RBI), says state-run banks have reported 8,670 “loan fraud” cases totalling Rs. 612.6 billion over the last five financial years up to March 31, 2017.
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