PNB names Nirav Modi and Gitanjali Gems in the mega Rs 114-bn fraud

Core banking system bypassed to issue unauthorised and fraudulent guarantees

In what may turn out to be one of the biggest scams in the country’s corporate history, Delhi-based Punjab National Bank (PNB) said on Wednesday it had been defrauded of about Rs 114 billion by jeweller Nirav Modi, his maternal uncle Mehul Chinubhai Choksi, and other relatives through a clutch of companies they own.

The country’s second-largest public sector bank (PSB) said two of its employees were involved in the scam, where the bank’s core banking system was bypassed to raise payment notes to overseas branches of other Indian banks, including Allahabad Bank, Axis Bank, and Union Bank of India, using the international financial communication system, SWIFT.

Three jewellers Gitanjali Gems and its subsidiaries Gili and Nakshatra are also under the scanner of investigation agencies.

Executives in other banks said they were insulated against the fraud, as the payment request was raised by PNB (irrespective of who raised that in the bank), and therefore, the payment would have to be met by the Delhi-based bank.

PNB had overdues slated to be paid on January 25 and subsequently on February 5, which were in default, said Usha Ananthasubramanian, chief executive officer (CEO), Allahabad Bank.

“We do have exposure to PNB, but it is on the bank, and not on the client. The exposure is roughly in the range of Rs 20-22 billion,” Ananthasubramanian said.

Click here for PNB Scam

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