India's biggest bank fraud: As a scam of $1.8 billion was revealed

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On 16th February 2018, the Managing Director of Punjab National Bank (PNB), one of India’s public sector bank broke his silence (Business Standard) on the alleged ₹11,300 crores ($1.87 billion) scam by diamond merchant Nirav Modi and his maternal uncle Mehul Choksi. The scam was started in 2011 and the fraud was detected by the bank on January 3 this year. In the press conference by Sunil Mehta, the MD of PNB also added that “We will come out of the present situation. We are in discussions with stakeholders, including other banks that are party to this development. We will resolve it and honor all bona fide commitments (New York Times) with other banks”

Nirav Modi,  a 47 years old Indian businessman, a billionaire jeweler also appeared on the Forbes billionaire list (Forbes) of 2017.  Modi is accused of money laundering case by PNB, where employees of PNB, Gokulnath Shetty and Manoj Kharat, the deputy manager and clerk of Brady House branch of the bank in Mumbai have issued  Letters of Undertaking (LoU) (The Hindu) to Modi’s companies and their banks. An LoU is a guarantee that a bank is obliged to repay the loan if the actual borrower fails to pay back the loan. The employees of the bank didn’t follow the process of securing cash reserve or collateral from Modi, and there was no record of transactions (Business Today) in bank’s core banking software, the system on which the banks’ financial transactions are run and recorded.

The leader of Communist party of India shared a photo of Nirav Modi being part of Prime Minister Narendra Modi’s  in Davos.

This scam has brought two national parties of India under the scan of media houses, as both the national parties, Indian National Congress(INC) and Bharatiya Janata Party(BJP) are playing the blame game on each other.  The opposition party INC targets the Prime Minister and his cabinet for helping Nirav Modi to flee the country and also alleges that the Prime Minister’s office was aware of the fraud as the office has acknowledged a handwritten complaint filed (The Times of India) on 26th July 2016 by whistleblower Hari Prasad SV. Which was later countered by the ruling party BJP saying, Nirav Modi was not part of the Indian delegation in Davos and he was part of was part of the CII (The Hindu) [Confederation of Indian Industry] delegation.

In between, Nirav Modi, his wife Ami,  his brother Nishav and uncle Mehul Choksi flew out of the country (NDTV) in the first week of January.  The countries federal agencies ED raids at 35 locations in 11 states and CBI has released look-out notices (Hindustan Times) for Nirav Modi and family members accused of this scam.

 

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