PNB fraud: RBI stops use of LoUs; Nirav Modi in deeper trouble: 10 updates

PNB, Punjab National BankFugitive jeweller Nirav Modi obtained his first fraudulent guarantee from PNB’s Brady House branch in Mumbai on March 10, 2011 and managed to get 1,212 more such guarantees over the next 74 months, Finance Minister Arun Jaitley said on Tuesday. Companies linked to Nirav Modi obtained Letters of Undertaking (LoUs), which were used to get loans from overseas branches of Indian banks, up to five guarantees on a single day, with the help of rouge employees of the country’s second biggest state-run bank. In a written reply to a question in the Rajya Sabha, Jaitley said the last fraudulent LoU was issued on May 23, 2017. During these six years, 53 genuine (non-fraudulent) LoUs were also issued to Nirav Modi Group – the first being on March 5, 2011 and last on November 6, 2017, he said. The fraudulent LoUs had a validity of up to one year. Payments due in January this year were against LoU issued in February last year, he said, listing date-wise the LoUs issued. Companies linked to Modi and his uncle Mehul Choksi defrauded PNB to the tune of Rs 136 billion. Choksi’s Gitanjali Group defrauded Rs 70.8086 billion while the rest is attributed to companies of Modi. ALSO READ: PNB fraud fallout: RBI stops use of LoUs for trade credit for imports Jaitley said “PNB Head Office received a report suspicious outstanding unauthorised transactions from Circle Office, Mumbai on January 23, 2018.” “Immediately an investigating team was constituted which gave its preliminary report on January 25, 2018. On January 29, 2018 (January 26 to 28 being public holidays), fraud was reported to RBI and complaint lodged with CBI Mumbai,” he said. 1. Nirav Modi got 1,213 fraudulent guarantees in six yrs: FM Fugitive jeweller Nirav Modi obtained his first fraudulent guarantee from PNB’s Brady House branch in Mumbai on March 10, 2011 and managed to get 1,212 more such guarantees over the next 74 months, Finance Minister Arun Jaitley said today. Companies linked to Nirav Modi obtained Letters of Undertaking (LoUs), which were used to get loans from overseas branches of Indian banks, up to five guarantees on a single day, with the help of rouge employees of the country’s second biggest state-run bank. In a written reply to a question in the Rajya Sabha, Jaitley said the last fraudulent LoU was issued on May 23, 2017. During these six years, 53 genuine (non-fraudulent) LoUs were also issued to Nirav Modi Group – the first being on March 5, 2011 and last on November 6, 2017, he said. ALSO READ: PNB scam: Nirav Modi got 1,213 fraudulent guarantees in 6 yrs, says Jaitley 2. PNB discloses $145 mln additional exposure in fraud probe Punjab National Bank has told police that it has uncovered additional exposure of Rs 9.42 billion ($145.2 million) in connection with a massive alleged fraud, according to a court filing seen by Reuters. In what has been dubbed as the biggest fraud in India’s banking history, PNB, the country’s second-biggest state-run lender, said last month it had been defrauded of about $2 billion by two jewellery groups who raised credit from overseas banks based on fraudulent guarantees issued in collusion with rogue PNB staff. 3. RBI stops use of LoUs for trade credit for imports In a major decision, RBI on Tuesday banned banks from issuing Letters of Undertaking (LoUs) — instruments used allegedly by diamantaire Nirav Modi and his uncle Mehul Choksi to defraud state-owned PNB of Rs 130 billion in connivance of bank officials. The RBI said the decision to discontinue the practice of LoUs and Letters of Comfort (LoCs) for trade finance comes into force with immediate effect. “On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by AD Category–I banks with immediate effect,” the central bank said in a notification. 4. CBI registers fresh case against Nirav Modi: The Punjab National Bank on Sunday filed a fresh complaint with the CBI alleging that three firms liked to diamantaire Nirav Modi’s Firestar International- Solar Exports, Stellar Diamonds and Diamond R Us after spotting circular transactions between them.

Source: Business Standard