Huge scam can touch Rs 20k cr; 10 suspended
India's second largest government bank, Punjab National Bank (PNB) is facing the biggest payment fraud in India's corporate history where diamond merchant Nirav Modi and his partner Mehul Choksi have allegedly fraudulently transacted around Rs 11,000 crore with the help of banking officials in Mumbai's Brady House Branch.
Bank sources said this scam could be of worth Rs 20,000 crore and other banks may also be involved. Major jewellers such as Gitanjali, Ginni and Nakshatra have also come under the scanner of various investigating agencies.
Initially, the PNB complaint to CBI pegged the fraud at Rs 280 crore. However, after internal investigation, the alleged fraud amount jumped to Rs 11,000 crore. "The fraud amount could rise to more than Rs 20,000 crore as the records of other banks are also under scrutiny," a source in the corporate affairs ministry said.
"Ten officials of Punjab National Bank have been suspended, including the deputy manager of the branch," Rajiv Kumar, secretary of Department of Financial Services (DFS), said.
PNB is still assessing the impact of the allegedly fraudulent transactions. "The bank has detected some fraudulent and unauthorised transactions in one of its branches in Mumbai. Based on these transactions, other banks appear to have advanced money to these customers abroad," PNB said in a statement issued to stock exchanges on Wednesday.
On Jan 29, 2018, the Central Bureau of Investigation (CBI) booked noted jewellery designer Nirav Modi, his brother Nishal Modi and some PNB officials for 'criminal conspiracy, cheating and abuse of official position' and mismanaging money from the bank to the tune of Rs 280 crore.
The case was filed after Avneesh Nepaliya, a deputy GM in the bank, received a complaint about the fraudulent transactions and caused a "wrongful loss". According to the complaint, Nirav and Nishal Modi, Ami Modi and Mehul Choksi, partners of Diamond R US, Solar Exports and Stellar Diamonds, have allegedly mismanaged Rs 280 crore with the collusion of two bank officials, Gokulnath Shetty and Hemant Kharat.
Two banks — Axis Bank and Allahabad Bank — had disbursed the amounts from their Hong Kong branches to the big jewellery companies in India. A bank source said that PNB was planning to issue a press statement, but has deferred it, as internal investigation is underway.