Case Study

PNB Scam
NIRAV MODI
PNB FRAUD
Introduction:
Fake letters of understanding were issued by bankers of
PNB, Brady House Branch, Mumbai
• The fake LoUs backed the import of pearls, for one year
• RBI guidelines for LoU of the same was 90 days from date of
shipment Indian Banks involved ignored this guideline
• They failed to share any information provided by the credit
firms with PNB
• First fraudulent LoU obtained by Nirav Modi on 10 th
March
2011
• Subsequently he managed to get 1 212 more guarantees over
the next 6 years

Who is to be blamed:
Nirav Modi,his wife Ami Modi, brother Nishal Modi and
uncle Mehul Choksi all partners of the firms M/s Diamond
R US, M/s Solar Exports and M/s Stellar Diamonds
•
Gokulnath Shetty( retired Deputy Manager,PNB Manoj
Kharat Clerk,PNB
•
Usha Ananthasubramanian (MD and ED PNB between
August 2015 May 2017
•
Allahabad Bank, Union Bank, Axis Bank, Bank of India,
State Bank of India They chose not to record the transactions
in the bank's own system

When did it go downhill

In January 2018 the three involved firms approached PNB
for bank
credit via LoU
•
PNB official requested 100 cash margin since no credit
limit
sanctioned for the firms previously
•
The firms claimed to have availed the facility without any
requirements in the past and contested the bank request
•
Bank records did not contain any past facility grants to
the firms This
raised an alarm and forced the bank to launch an internal
investigation
•
Internal investigation found two bank officials had
fraudulently issued
LoU to the firms and these fraudulent LoU were sent via
SWIFT
system through which credit was offered to the firms