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All About Punjab National Bank & Nirav Modi Scam



The latest PNB and Nirav Modi fraud case shocked the whole nation and mocked Indian Government led by Prime Minister Narendra Modi. Who always vouched for corruption free nation.

Punjab National Bank (PNB) unearthed Rs 11,300 crore scam on Wednesday, one of the biggest banking scams in the country.

Punjab National Bank also lodged a complaint with Central Bureau of Investigation (CBI) against billionaire jeweler Nirav Modi and his company, who was also part of World Economic Forum last month at Davos.

Punjab National Bank revealed that this week they detected fraudulent transactions worth more than Rs 11,380 crore in a Mumbai branch. To imagine how much this amount just look at this :

*It was one-third of the bank’s entire market capitalisation at the time when it was reported.

*It is almost equal to  8.5 times the bank’s profit for the financial year 2016-17.

Modi left India before Punjab National Bank filed a First Information Report. Meanwhile, ED and CBI conducting raids at various properties of Modi. And as per the report, ED seized diamonds worth Rs 5000 Cr.

What exactly happened?

As per Punjab National Bank’s note a junior branch official “unauthorisedly and fraudulently” issued Letters of Undertakings on behalf of Nirav Modi and companies connected to him. The Letter of Undertaking allowed the companies to get buyer credit.

In simple way to understand this. These LoU letter helped Nirav Modi and his companies to obtain Credit or loan from the foreign bank without giving ant security. And apart from that whatever money Nirav Modi borrowed from foreign banks, he used them for other purposes not for importing the goods.

“Financial Services Secretary Rajiv Kumar told IANS that 10 PNB employees have been placed under suspension”.

How Bank Detected It

Punjab National Bank in its note stated that the companies again approached the same branch for seeking LoUs. But main culprit was retired that time and the official who was present that time asked for cash margin of 110%, as they only had the current account with the banks.

The company said we are availing such LoUs from several years, that too without providing any cash margin. This raised the alarm and immediately all the SWIFT trails were checked and bank figured out since 2011 this scam is going on.

After going into details they found out that Instructions on SWIFT sent to the foreign bank to lend credit to Modi and his company as we are giving letter of undertaking on their behalf but the same was not punched in bank’s software Finacle. That’s the reason it went unnoticed so long.

Well, this is not the end of the story, now the question arises is why the companies would go back to the bank and ask for letter of credit by revealing their method when they knew the allegedly conniving official had retired. Because there may be some others too who are involved. And because of this 10 employees suspended immediately.

“Financial Services Secretary Rajiv Kumar told IANS that 10 PNB employees have been placed under suspension”.


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  • Vaishali on February 15, 2018

    Good ! Informative

    • Suraj on February 15, 2018

      Thank You

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