PNB SCAM

Name – OMKAR DINKAR PHARANE

Std. – MBA F.Y
Div. – A
Roll no. – 20400661
Subject – MFS
INTRODUCTION TO NIRAV
MODI
People behind this scam

Mehul Chokai Nirav modi,Founder of "Nirav Modi

M.D of Greethanjali Global diamond Jewellery house.

Gokulnath Shetty(in grey hair), Retd. Deputy manager of PNB's Foreign exchange
department
PNB SCAM: IN DETAIL
• Punjab National Bank fraud Case relates to alleged fraudulent Letter
of Understanding (LOU) worth 11,600 crore (USD 1.77 billion dollars)
that took place at its branch in Brady House, Mumbai, making
Punjab National Bank potentially liable for the amount. The
fraudulent transactions are allegedly linked to designer and jeweler
Nirav Modi of Gitanjali Group, against whom a complaint has been
filed with the Central Bureau of Investigation. The transactions were
first noticed by a new employee in the bank. The bank then
complained to the CBI which is currently investigating the scam
apart from ED.
• The bank said that two of its employees at the branch were involved
in the scam, when the bank's core banking system was bypassed
when the corrupt employees issued LOUS to overseas branches of
other Indian banks, including Allahabad Bank, Axis Bank, and Union
Bank of India, using the international financial communication
system, SWIFT. Three Jewelers Gitanjali Gems Ltd and its subsidiaries
Gili and Nakshatra are also under the scanner of investigation
agencies.
• The scam was detected in the third week of January, as reported by "The
Quint" quoting Sunii Mehta, MD, PNB. He said that they have promptly
investigated it over 3-4 day and approached CBI on 29 January, 2018. An FIR
was booked on 30 January. 18 employees from PNB has been suspended so
far and Nirav Modi's home and offices were raided by the Enforcement
Directorate (ED). Officials informed that Modi along with his family fled from
India in the first week of January, days before the case was registered
• The Enforcement Directorate (ED) has registered a case under the
Prevention of Money Laundering Act (PMLA) in connection with another
cheating case, on the basis of a First Information Report filed by the CBI and
conducted raids across Nirav Modi's residences in the country
• This case is claimed to be India's biggest bank fraud. The founder of the
company Mehul Choksi recently ran away from India along with his nephew
after F.I.R was filled about the Scam. Nirav Modi allegedly took advantage of
the loopholes in the banking system by seeking the Letters of Understanding
(LOU)..
• It was found through SWIFT trail that one junior level branch official
unauthorizedly and fraudulently issued Letters of Undertaking (LOU) on
behalf of some companies belonging to Nirav Modi Group for availing
buyer's credit from overseas branches of Indian Banks," the cautionary note
by PNB stated.
NIRAV MODI FRAUD BEGAN A DECADE AGO

• • The practice of illegally issuing Letters of Understanding (LoUs)

and Foreign Letter of Credits (FLCs) and then rolling them over to
favour Nirav Modi and Mehul Choksi groups started in 2008 and
continued till these were discovered in January this year, according
to CBI officials, reported IANS. The illicit activities resulting in fraud
of Rs 11,300 crore occurred under the nose of top Punjab National
Bank officials but they claimed to be unaware of the scam.
• • The revelation came to the force during the questioning by CBI
officials to Rajesh Jindal, who was holding the charge of Mumbai-
based PNB's Brady House Branch Head between August 2009 and
May 2011, Gokul Nath Shetty, retired Deputy Manager from the
same branch who retired in May 2017, Bechu B. Tiwari (Chief
Manager, in charge of Forex Department), Yashwant Joshi (Scale II
manager of Forex Department) and Prafful Sawant (Scale I officer,
export).
LATEST HIGHLIGHTS OF
NIRAV MODI FRAUD
• • 1. The Central Bureau of Investigation (CBI) officials said the
alleged multi crore fraud by issuing LOUS and FLCs for sanction
of loan to diamantaire Nirav Modi and his uncle Mehul
Choksi's group of firms continued during Jindal's tenure. Jindal,
posted as GM Credit at PNB's Head Office in New Delhi, was
heading the second largest branch of the PNB when the
practice of issuing the LoUs without sanctioned limits
continued, reported IANS.
• 2. All five PNB officials arrested so far were part of the forex
department at the bank's Brady House branch at the time of
the fraud took place, said officials, adding these employees, in
collaboration with the staff and associates of the firms headed
by Nirav Modi and Choksi, committed wrongdoings for
personal gains.
• 3. PNB's employee Tiwari, in his capacity as Chief Manager, was to monitor
Shetty's transactions. However, Tiwari told the interrogators that during
2015-17, he did not monitor the fraudulent and illegal LoUs issued by
Shetty.
• 4. The ED on Thursday said it has frozen mutual funds and shares worth Rs
94.52 crore of the Nirav Modi and Mehul Choksi groups. It also seized nine
high-end luxury cars of Modi as part of its investigation against him under
the criminal provisions of the Prevention of Money Laundering Act (PMLA).
These include a Rolls Royce Ghost, a Mercedes Benz, a Porsche Panamera,
three Honda variants, a Toyota Fortuner and an Innova. Officials of the
agency said frozen mutual funds and shares worth Rs 86.72 crore belong
to Choksi and his group, and the rest are owned by the Modi group..
• 5. CBI officials said details of additional amounts (of around Rs 6,400 crore)
would be added to the first FIR. The second FIR also names 11 directors of
the three Cholksi owned Gitanjali group companies-- Gitanjali Gems Ltd,
Gili India Ltd and Nakshatra Brands Ltd. The PNB fraud came to light on
January 16 when officials of Nirav Modi companies approached the bank
for buyers' credit without collateral saying they had been getting such
facility for years. The bank said that the official who had earlier allowed
such illegal facility through LoUs and FLCs had retired by then, and on
checking by officials, the whole fraud unravelled.
EFFECTS OF THIS SCAM
• Following the declaration, the shares in PNB, the country's
second-biggest state-run lender and fourth biggest overall by
assets, fell by 9.93 per cent.