Nirav Modi gave vague offers to repay money: PNB CMD

Diamond trader Nirav Modi, who is being liked to the alleged Rs 11,000 crore Punjab National Bank fraud, has written to the country's second largest state-run bank promising to repay the money and has sought six months to return the money.

Nirav Modi was booked by the CBI, along with wife, brother and business partner Mehul Choksi on 31 January, for allegedly cheating the state-run Punjab National Bank to the tune of Rs280 crore.

As for other banks, he said overseas branches of other Indian banks were affected by the transactions, except in one case.

"How can Nirav Modi and Mehul Choksi dupe the entire banking system through forged Letters of Understanding under the nose of the Modi government?". "What the government has not told us is that there is also an exposure of Rs 9,872 crore of various banks with Gitanjali Gems. We have not received any direction from our regulator RBI in the matter but they are our regulator, whatever direction they will give we will comply", Mehta said.

A finance ministry official said the Enforcement Directorate, a government agency that fights financial crime, would investigate the case to see whether it involved money laundering.

PNB says that on January 16 the accused firms presented a set of import documents to the Mumbai branch and requested buyers' credit to pay overseas suppliers.

PNB managing director Sunil Mehta addressed a press conference today where he explained that his bank had detected these fraudulent transactions on 3 January this year and had intimated the Central Bureau of Investigation (CBI) about it on 29 after carrying out internal investigations.

Cabinet minister Ravi Shankar Prasad said Nirav Modi was not part of the prime minister's delegation at the global gathering in Switzerland. An LoU is a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers.

PNB has sent letters to various banks cautioning them about their operations and stated that through the SWIFT trail it had found that without any authorisation, retired deputy manager Gokulnath Shetty and SWO Manoj Hanumant Kharat issued Letter of Undertaking (LoUs) on behalf of companies belonging to Nirav Modi and group. He informed that the bank has initiated criminal action against the staff members.

Mehta further said that the government too was examining the issue on day-to-day basis. The fraud dates back to 2011, although it remains unclear the duration for which it lasted and how many guarantees were given. "That is why we are the first one to detect and report this to the various law enforcement agencies", he said. "The bank has the capability and capacity to come out of this situation".

Shares of PNB on Thursday continued to drop for the second consecutive day, closing nearly 12 per cent lower, after having fallen 10 per cent the first day.

"The prime minister's refusal to come clean only points the needle of suspicion towards complicity in the loot of public money", Yechury said.

  • Eleanor Harrison