1,213 forged LoUs used by Nirav Modi in six years for the scam: Arun Jaitley

1,213 forged LoUs used by Nirav Modi in six years for the scam: Arun Jaitley

1,213 forged LoUs used by Nirav Modi in six years for the scam: Arun Jaitley

The onetime celebrated jeweler Nirav Modi had managed to get 1,213 false guarantees during a period of 74 months, with the first one being obtained from PNB’s Brady House branch in Mumbai on March 10, 2011, informed Indian finance minister Arun Jaitley on Tuesday.

Punjab National Bank’s Corrupt Employees helped Nirav Modi

Corrupt employees of the Punjab National Bank helped Nirav Modi and companies that are related to him, to obtain the Letters of Undertaking (LoUs) – sometimes up to five in a single day. Modi then made use of them to obtain loans from foreign branches of Indian banks.

Finance Minister Arun Jaitley informed the Parliment that Nirav Modi used 1,213 forged LoUs

Finance Minister Arun Jaitley made the comments in reply to a question in the Rajya Sabha. He informed that the last of the LoUs that Nirav Modi and his companies managed to obtain was on May 23, 2017.

He also said that on March 5, 2011, the first genuine LoU to Nirav Modi Group was issued and another 52 genuine ones were issued in the six-year period.

The forged LoUs were valid for a time period of one year. Jaitley said that for LoUs that were issued in February of 2017, payments for the same were due to be cleared a year later in January 2018.

₹13,600 crore was defrauded from the PBN by companies related to Modi and his uncle Mehul Choksi. Out of that amount, ₹7,080.86 crore was duped by Choksi’s Gitanjali Group.

Jaitley said, “PNB Head Office received a report suspicious outstanding unauthorized transactions from Circle Office, Mumbai on January 23, 2018.”

“Immediately an investigating team was constituted which gave its preliminary report on January 25, 2018. On January 29, 2018 (January 26 to 28 being public holidays), fraud was reported to RBI and complaint lodged with CBI Mumbai,” he said.

Department of Financial Services was informed by PBN on February 6

The Department of Financial Services, under the control of the finance department, was informed about the incident by PNB on February 6.

In another development, the PNB has now uncovered another ₹9.42 Billion that was exposed to the Nirav Modi scandal, the bank has told the police.

Nirav Modi and Punjab National Bank

Nirav Modi and Punjab National Bank

More frauds come to light by Mehul Choksi’s Gitanjali Group and Nirav Modi

Rs.70.8 billion of the PNB was defrauded by Gitanjali Group of Companies controlled by jeweler Mehul Choksi, the bank said in a filing on Tuesday. The bank had earlier said that the amount duped by Gitanjali companies was Rs.61.38 billion.

$2 Billion in frauds in less than Six Years

The bank now has a total exposure to the scandal of more than $2 billion.

All wrongdoings have been refused by Mehul Choksi and his nephew Nirav Modi.

There were no comments from PNB on the new development.

Reserve Bank of India to discontinue of Letters of Undertaking (LoUs)

Another fallout of the Nirav Modi scam was the Reserve Bank of India announcing the discontinuation of letters of undertaking (LoUs) or guarantees for foreign credits. Forged LoUs were at the center of the scandal and were used by the accused to collect the debt from foreign branches of Indian banks.

The decision of the RBI is to be implemented with immediate effect.

“On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/LoCs for Trade Credits for imports into India by AD Category I banks with immediate effect,” the central bank said in a notification.


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