Indian bank hit by $1.8bn fraud case

PNB fraud case Nirav Modi left India on January 1 lookout notice issued

Targeting Prime Minister Narendra Modi for the presence of PNB (Punjab National Bank) fraud accused celebrity jewellery designer Nirav Modi in the Indian business delegation at Davos, Congress president Rahul Gandhi has said "being seen with the Prime Minister helped the businessman flee the country".

The Enforcement Directorate conducted searches in several properties linked to billionaire jewellery designer Nirav Modi in Mumbai, Delhi and Gujarat on Thursday, and seized diamond, jewellery and gold worth Rs 5,100 crore, officials said.

Giving out a stern warning to those involved in the Rs 11,400-crore fraud at one of Punjab National Bank's (PNB) Mumbai branches, the Centre on Thursday, said "nobody, irrespective of their status or stature, shall be spared".

The raids came after the agency filed a Rs 280-crore money laundering case against Modi, his wife Ami, brother Nishal and business partner Mehul Choksi yesterday, following a complaint by Punjab National Bank. The bank when denied the request, Nirav companies said they had earlier used the facility for many years.

The source added that around 150 Letters of Understanding were issued to Nirav Modi's firms by the PNB.

"This could subject PNB to significant potential impairments", he wrote, adding this could increase the bank's capital requirement by 80 billion rupees ($1.25 billion). Whether they travelled together has to be probed, they said. "Why were all the authorities, including the finance ministry, its financial intelligence units and all other authorities sleeping on their job?" "But we don't want to stoop to that level", he said.

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PNB managing director and chief executive Sunil Mehta told reporters on Thursday the bank is working to bring the perpetrators to book and will pay back the other banks if the regulators direct it to do so once investigations are complete.

Though the scam, mainly involving the PNB, is about Rs 11,000 crore, the Congress said it would be around Rs 30,000 crore if banking experts are to be believed, as more banks were exposed to companies owned by Chokshi and Nirav Modi.

PNB has accused three companies - Solar Exports, Stellar Diamonds and Diamond R USA - it said belong to Nirav Modi, a high-end jeweller who runs his eponymous Nirav Modi stores that spread from NY to Hong Kong. "Who is responsible for biggest bank loot scam?" he asked.

Mehta further said that the government too was examining the issue on day-to-day basis. "So all these things are as per our clean banking agenda", Mehta added. However he said that the offer was not "concrete". He informed that the bank has initiated criminal action against the staff members.

"This fraud had started in 2011. That is why we are the first one to detect and report this to the various law enforcement agencies", he said.

Shares of PNB on Thursday continued to drop for the second consecutive day, closing nearly 12 per cent lower, after having fallen 10 per cent the first day.

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