How did the scams take place despite regulations? CVC asks PNB, Finance Ministry to submit report in 10 days

The Central Bureau of Investigation (CBI) on Monday continued searches in various cities in connection with Rs 11,400 cr fraud at the Punjab National Bank (PNB). 

State-owned PNB has been rocked by the fraud involving Nirav Modi who allegedly acquired fraudulent Letters of Undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders. 

The Central Vigilance Commissioner K V Chowdary met senior PNB and Finance Ministry officials in connection with the fraud case which is being probed by the CBI.

The officials from Punjab National Bank (PNB) are understood to have shared the details of the action taken by them to deal with the fraud, they said.

The CVC has asked for names of officials who were involved and sought identification of officials who could have taken action and prevented it.

It also asked PNB and Finance Ministry officials to submit the report on how the scam took place despite monetary regulations being in place. They have been given 10 days to the bank to submit the report, ANI news reported.

Besides Chowdhary, Vigilance Commissioner TM Bhasin and officials from the Finance Ministry also attended the meeting, they said.

Meanwhile, the PNB Branch was secured with a seal briefly during wee hours so as to prevent any inadvertent or unauthorised opening by concerned PNB staff. 

However, the seal and notice at the branch premises were removed in the noon.

According to sources, temporary sealing of the premises was a time-bound security measure to prevent possible tampering. It will not affect the regular business of the branch.

The CBI has registered two FIRs — one on January 31 and another a few days ago — against billionaire diamond merchant Nirav Modi, his relative Mehul Choksi of Gitanjali Gems and others for allegedly defrauding PNB of about Rs 11,400 crore.

The CVC also met senior officials of the Central Bureau of Investigation in connection with the scam being probed by it.

The Commission exercises superintendency over the CBI in corruption-related matters.

Here are key developments

► The Enforcement Directorate visited the residence of former Allahabad Bank director Dinesh Dubey. Dubey had alleged that the bank had granted a loan to Gitanjali Gems in 2013 despite his dissent. 

► ED conducted raids at over 50 locations across 20 cities in connection with the PNB fraud.

► In Bihar, ED searches on at 3 places. Two in Muzaffarpur and one in Kishanganj district (franchise shops of Gitanjali). The agency recovered jewellery worth Rs 1.5 crore. "The value is likely to go up as searches are still on and may continue till late night," said ED official. They have already recovered around Rs 3 crore in Bihar till yesterday in this case.

► ED raids being conducted in Lucknow, Noida and Ghaziabad. 

► Raids are being conducted at Gitanjali and Nakshatra showroom in Muzaffarpur. 

► In West Bengal, six locations of Gitanjali and Nakshatra jewellery outlets were being searched in Kolkata.   

► Top PNB officials including MD Sunil Mehta met the CVC officials. 

► In a related development, the Central Vigilance Commission on Monday issued an advisory to all the public sector banks ordering them to transfer the officers who have completed three years as on December 31, 2017.

► The CVC advisory also stated that the transfer of all clerical staff who have completed five years as on December 31, 2017 ‘should be done immediately’.

► The PNB has lodged two financial fraud complaints of Rs. 11400 crore and Rs 280 crore against Nirav Modi, his family members and Mehul Choksi, owner of Gitanjali Gems.

►  The Central Bureau of Investigation (CBI) has filed a formal case charging four- Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi- on January 31 over Rs 280 crore fraud.

► A petition has been filed in the Supreme Court on Monday demanding a Special Investigation Team (SIT) probe in the ongoing Punjab National Bank (PNB) fraud.

Rahul attacks Modi

Congress President Rahul Gandhi fired yet another salvo at Prime Minister Narendra Modi over his "silence" on the multi-crore PNB bank fraud, asking where the "country's watchman" was when jeweller Nirav Modi fled the country like liquor baron Vijay Mallya.

Gandhi took the swipe at the prime minister for his refrain during poll rallies that he would act as a watchman for the country, and cited his "na khaoonga, na khaane doonga" (will neither do nor allow anyone to do corruption) statement.

Taking to Twitter, the Congress chief said the entire country was keen to know the "secret behind his silence" and alleged that it screams out loudly where his loyalties were.

Gitanjali's CFO, VP & board member quit

Gitanjali Gems, which is embroiled in the Rs 11,400 crore PNB loan scam, said two of its senior management officials including CFO Chandrakant Karkare, and a board member have quit.

The company's Vice President (Compliance) and Company Secretary Pankhuri has resigned with effect from February 13, while Karkare has resigned from the post of CFO effective from February 15, Gitanjali said in a regulatory filing.

Its board member Krishnan Sangameswaran has also resigned, the company added.