Banks have put almost all major jewellery groups under the scanner following leads that jeweller Nirav Modi is behind the fraudulent transactions at the Punjab National Bank branch in Mumbai involving Rs11,346 crore ($1.77 million).
Major jewellers Gitanjali, Ginni and Nakshatra have also come under the scanner of investigating agencies after Punjab National Bank’s declaration of Rs11,346-crore fraud, committed allegedly by Nirav Modi.
All major banks are now looking at their systems and processes after Punjab National Bank (PNB) on Wednesday referred the matter to law enforcement agencies for recovery.
“Four big jewellers – Gitanjali, Ginni, Nakshatra and Nirav Modi – are under scanner. The CBI and Enforcement Directorate are looking at their arrangements with various banks and end use of money,” PTI quoted a senior official of a public sector bank as saying.
The finance ministry has asked all banks to present a status report as soon as possible. The ministry has issued strict instruction to all banks that no big fish should go scot free and no honest borrower is harassed, bank officials said.
In 2015, Bank of Baroda, another public sector bank, had brought to light a scam in which two Delhi businessmen cheated it of Rs6,000 crore (a little less than $1 billion).
Investigations revealed that the forex transactions were done mainly via advance remittances for import, through newly-opened current accounts. Heavy cash transactions, sometimes four or five times a day were also noticed.
The Enforcement Directorate, under the revenue department of the finance ministry, had arrested the businessman duo under money laundering provisions.
PNB said the fraudulent transactions at one of its branches in Mumbai involved a few select account holders, including jeweller Nirav Modi. Based on these transactions, done by his brother Nishal, wife Ami and Mehul Chinubhai Choksi, other banks appear to have advanced money to these customers abroad.
These transactions were being carried out in connivance with senior bank officials of the level of deputy general manager since 2011.
The CBI has received two complaints from PNB against billionaire jeweller Nirav Modi and a jewellery company alleging fraudulent transactions.
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.
PNB has now filed a complaint with the CBI alleging that Modi and companies linked to him fraudulently acquired PNB guarantees worth Rs10,000 crore ($1.6 billion) that they later used to obtain loans from abroad. The bank further alleged that Modi worked with some junior PNB officials to get the letters, say reports.
Modi, the son and grandson of diamantaires, grew up in Antwerp, according to his website. Apart from India, he has boutiques in cities like New York, London, Beijing, Hong Kong and Singapore. His company Firestar International Ltd was reportedly planning a Rs1,000 crore initial public offer.