Indian bank cheated of US$1.8b in complex fraud


State-owned Punjab National Bank (PNB) on Wednesday said it had detected a Dollars 1.77 billion (about Rs 11,400 crore) scam where billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from a branch in Mumbai to secure overseas credit from other Indian lenders.

ED has already raided nine properties associated with Nirav Modi, three in Surat, four in Mumbai and two in Delhi. PNB has already complained against Nirav Modi for fraudulent transactions worth Rs 280 crore, for which he is now under investigation. Common, she has lodged a case on now popular diamond jeweller Nirav Modi, who is the most wanted in the 11,400 crores scam that is going to shake Punjab National Bank from the roots.

The fraud was allegedly perpetrated by several PNB employees, including key branch officials, without authorisation, issuing so-called letters of undertaking, or LoUs, (essentially guarantees) that helped Modi's companies raise credit from other banks.

Mumbai- Shares of the Punjab National Bank (PNB) on Thursday continued to drop for a second consecutive day - closing nearly 12 per cent lower - after a $1.8 billion fraud was detected in one of its branches in Mumbai.

In late January, shortly before the fraud allegations were made, Modi was photographed alongside Indian Prime Minister Narendra Modi at the World Economic Forum in Davos. Footage broadcast on Indian television news channels showed officers entering one of Modi's jewellery showrooms in India's financial capital.

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Indian federal agents last week said they were investigating the jeweller and others over accusations that they defrauded PNB of $44 million. Ami is said to be an American citizen, while Nishal is a Belgian national. Nirav Modi had roped in Priyanka Chopra to be the global ambassador for the Nirav Modi brand a year ago. "...the bank (Axis Bank), through its overseas branches, undertakes transactions against LoU issued by other banks".

"If the entire onus is on us, we will take responsibility", Mehta said, adding the bank has taken action to book culprits and protect its financial interests.

Union Bank shares fell 3% to touch an intra-day low of Rs116.50, which was also its 52-week low level, on BSE.

PNB in a regulatory filing yesterday said, "The Bank has detected some fraudulent and unauthorised transactions in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance".

Alleging that "loot and escape" had become the hallmark of the Modi government, Surjewala said: "Post-escape of "Lalit Modi" i.e. "Chhota Modi" and "Vijay Mallya", another "Modi scam" has hit India's banking sector the hardest".