Monday, 18 June, 2018

PNB fraud: Steps initiated to recover $1.8 billion, says bank CEO

The branch of Punjab National Bank in Mumbai where fraudulent transactions worth Rs 11,400 crore were detected on Thursday The branch of Punjab National Bank in Mumbai where fraudulent transactions worth Rs 11,400 crore were detected on Thursday
Lindsey Cook | 16 February, 2018, 07:02

It was when a bank official registered a complaint with CBI on January 29 against three companies- Diamonds R Us, Solar Exports, and Stellar Diamonds and four people including billionaire jewellery designer Nirav Modi and managing director of Gitanjali Gems Pvt Ltd, of defrauding the bank of Rs.11,400 crore. "It is derogatory, scandalous and demeaning", he said while addressing a press conference.

The raids came after the ED filed a money laundering case of alleged fraud of Rs 280-crore against Modi, his wife Ami, brother Nishal and business partner Mehul Choksi and others yesterday, following a complaint by Punjab National Bank (PNB).

CPM general secretary Sitaram Yechury also wanted the prime minister to spell out the action he had taken after his office was informed of the scam. But in the end the government couldn't do anything. Also, the government must introspect that when it is repeatedly infusing capital into loss making PSU banks with reckless risk management, where will the buck stop when it comes to accountability?

Acccusing the government authorities of "sleeping" on a July 26, 2016 complaint, the principal Opposition party called it the "biggest bank loot in the past 70 years" and referred to the celebrity designer as "chhota Modi". He joined a photograph of Indian businessmen. "That is why we are the first one to detect and report this to the various law enforcement agencies", he said. BJP takes strong offence to the kind of language being used by describing someone like that. In what could be the largest banking fraud in the country's history, Modi allegedly acquired illegal letters of undertaking from PNB through a junior ranking official, who did not route them through the Core Banking System in order to avoid detection.

Taking a dig at the PM, Rahul Gandhi tweeted: "Guide to Looting India by Nirav MODI. 1". The bank, India's second-largest state-owned lender, announced on Wednesday that it had also detected fraud of nearly $1.8bn at a single branch in Mumbai, sending its shares plummeting.

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(The fraud) is a reminder that the bank recapitalisation scheme that the government outlined months ago doesn't solve the problems in Indian banking.

"They have to bite the bullet and take on bureaucrats and the bank employee unions and actually fix banks' governance or India will struggle to maintain its growth projections".

He said, the Bank is taking efforts to protect the financial interest.

He said that besides ED and CBI, the I-T department is also keeping a close watch on billionaire jeweller Nirav Modi.

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