PNB Fraud case: Nirav Modi left India a month before FIR


PNB, India's second-largest state-run lender with assets of $120 billion, said in a filing on Wednesday that it had detected fraudulent transactions worth $1.77 billion at a single Mumbai branch.

The estimated scale of the fraud of Rs 11,000 crore is more than eight times PNB's net profit of Rs 1,325 crore in the financial year ended March 2017.

PNB has found some high amount of fraud and illegal transactions in its Mumbai branch and this all was done to provide the benefit to few account holders with the conspiracy. "In the bank, these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions", it said.

Meanwhile, the stock tanked almost 10 per cent on Wednesday considering the magnitude of the scam which is almost one-third the market capitalisation of PNB, he said. He said this is a standalone incident as it has taken place only in one of the bank's branches.

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PNB has lodged a complaint with the CBI against Nirav Modi about the fraudulent transactions. The bank after unearthing the fraud has filed another complaint with the CBI on February 13.

MD Sunil Mehta said that the Rs 11,360 crore first started in 2011. The bank sought 100% cash margins for issuing letters of undertaking for raising buyers' credit, which was contested by the firms saying they had availed of the facility in 2010. On the possible involvement of Union Bank of India, Allahabad Bank and Axis Bank in the fraud, officials said, "These two public sector banks and a lone private bank are learnt to have offered credit based on letters of undertaking (LoUs) issued by PNB".

"In the normal course of trade business, the bank through its overseas branches undertakes transactions against letter of undertakings (LoU) issued by other banks".

At least ten employees of PNB have been suspended. In National Stock Exchange, it plunged 8% per cent to touch an intra-day low of Rs 148.80. Dismissing the claims, Ravi Shankar Prasad said: "Nirav Modi did not meet PM Modi at Davos".

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He asked how can Niravi Modi and managing director of Gitanjali Gems, Mehul Choksi dupe the entire banking system "under the nose" of Prime Minister Modi.

Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi are partners in Diamonds R US, Solar Exports and Stellar Diamonds, which has shops in foreign locations such as Hong Kong, Dubai, and NY.

The fraud opened a can of worms that could impact the entire banking industry.

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