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Published On: Wed, Feb 14th, 2018

PNB : Fraud transactions Rs11,400 crore illegally transferred abroad

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pnb_660_021418104719MUMBAI : Punjab National bank, India’s second-largest government bank, reported today that $1.8 billion or over Rs. 11,000 crore of taxpayers’ money had been illegally transferred abroad to select customers from a single branch in Mumbai.

One of India’s biggest banks has accused jeweller Nirav Modi — who’s dressed stars including Kate Winslet and Priyanka Chopra — of involvement in a multi-billion dollar fraud that could extend to other lenders, said people familiar with the matter.

PNB filed a complaint with the Central Bureau of Investigation (CBI), the federal investigation agency, alleging that Modi and companies linked to him fraudulently acquired PNB guarantees worth Rs10,400 crore  that they later used to obtain loans from abroad, the people said, asking not to be identified as the details aren’t public.
sources in the CBI were quoted by the News Agency PTI as saying that the agency had received two complaints against celebrity jeweller Nirav Modi, alleging fraud worth Rs. 10,000 crore.Shares of Punjab National Bank (PNB) plunged 10% on Wednesday after the state-run bank detected the financial fraud.
Investigative agencies have been informed about the latest fraud transactions, PNB said in the filing on Wednesday. The bank didn’t elaborate on what impact the fraud may have on its finances and it didn’t name the other lenders which could be hurt.

PNB had already filed a case against Modi two weeks ago — the details of which have been made public — alleging a Rs280 crore fraud and said it would check if the impact was deeper.

According to BloombergQuint Rajiv Kumar, India’s top banking bureaucrat, told  that the case is an isolated one that dates back to 2011. About 10 PNB employees have been suspended pending a CBI investigation, he said. He didn’t name any of the accused. An email and phone call made to Modi’s office was unanswered.

Modi himself hasn’t publicly commented on the previous case dated on 29 January, when PNB exhorted investigators to issue a “look out notice” so that Modi and his alleged accomplices “may not leave the country to avoid process of law against them.” Authorities filed complaints against Diamond R US, Solar Exports and Stellar Diamonds, saying Modi and his family are partners in these firms.

Modi grew up in Antwerp, the son and grandson of diamantaires, according to his website. Apart from India, he has boutiques in cities including New York, London, Beijing, Hong Kong and Singapore. His company Firestar International Ltd.

According to details of that older complaint, PNB alleged that Modi, his wife and brother, and “other unknown persons” had worked with some named PNB officials at a Mumbai branch to obtain letters of understanding from PNB in 2010 without following due procedure.
In order to avoid detection, they hadn’t made transaction entries into PNB’s systems but had transmitted instructions to the Hong Kong branches of Allahabad Bank and Axis Bank Ltd. through the SWIFT global payment system.Modi had claimed to need the cash to pay his import bills but the Rs280 crore raised weren’t used for this purpose, PNB had alleged, without elaborating.

The case came to light when Modi’s companies sought a fresh loan last month. By then the PNB official they had allegedly been working with had retired, according to PNB’s complaint. Since there was no sanctioned limit in the name of Modi’s companies, PNB said it asked for Rs100% cash margin to issue the letters of understanding.
The case poses further questions about the health of India’s banks, which are already grappling with one of the worst bad-loan ratios among big economies.
Kate Winslet had worn Modi’s creations at the 2016 Oscars and said he’d donated to her foundation. Last year, Modi had signed up Priyanka Chopra — star of the US TV series Quantico — as his brand ambassador. (With Agency Inputs).



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