Gitanjali Gems breaches lower circuit; premises searched in PNB fraud

PNB said the fraudulent transactions at one of its branches in Mumbai involved a few select account holders, including jeweller Nirav Modi.

India's Enforcement Directorate, a government agency that fights financial crime, will probe the possibility of money laundering in the case. "How can Nirav Modi and Mehul Choksi dupe the entire banking system through forged Letters of Understanding under the nose of Modi govt?" he said.

With the internal investigations underway, the Interpol had issued diffusion notice against billionaire jeweller Nirav Modi, his wife Ami Modi, brother Nishal Modi and his business partner and uncle Mehul Choksi.

Modi, whose jewellery creations are popular among celebrities, is already being investigated by the CBI for alleged cheating and fraud involving Rs280 crore at a PNB branch.

"This fraud had started in 2011".

In a communique to the BSE, the bank said its liability will be determined after taking a closer look at these transactions and that the matter has been referred to law enforcement agencies. PNB is fully committed to its clean banking policy. Indian media carried a group photograph with Prime Minister Narendra Modi in the foreground and Nirav Modi, who is no relation, grinning between rows of Indian business leaders behind him.

Mehta tried to assure stakeholders saying that it was a standalone incident confined to a single branch in Mumbai.

The bank said the fraudulent transactions appeared to benefit a handful of customers. We were the first to inform SEBI about this under the disclosure norms. He even went so far as to say that PNB has the "capabilities and capacities" to come out of this situation unharmed. "We have kept all the bankers aware of this situation", Mehta said in the conference.

Now when the three firms approached PNB in January this year for buyers credit, they were denied.

On Thursday, PNB shares sank more than 14 percent, its biggest fall since 2009, after having dropped 9.8 percent the day before.

The Ministry of External Affairs (MEA), on Friday suspended the validity of Nirav Modi and Mehul Choksi's passports.

He also alleged that Prime Minister Modi had met Nirav during his visit to Davos for the World Economic Forum.

"The committee has asked the finance ministry officials to submit a report before the panel on this fraud", another member who was present in the meeting told PTI.

"We have mentioned in CBI complaint this issue and reported that since investigation is underway we shall be reporting crystalized amount of fraud after completion of detailed investigation". As a result, overseas branches of many Indian banks gave foreign exchange credit. PNB said in its statement that the fraud was discovered through the SWIFT trail when the official allegedly in cahoots with Modi had retired and one of his companies reached out for a loan.

  • Eleanor Harrison