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What is PNB Scam

PNB Scam

About PNB Scam

What is PNB Scam

The Punjab National Bank scam relates to fraudulent letter of undertaking worth Rs 10,000 crore issued by the bank. 
 
The key accused in the case were jeweller and designer Nirav Modi, his maternal uncle Mehul Choksi, and other relatives and some PNB employees. Nirav Modi and his relatives escaped India in early 2018, days before the news of the scam became public. PNB scam has been dubbed as the biggest fraud in India's banking history.
 
How the 10,000-crore scam happened?
 
Bankers used fake Letters of Undertakings (LoUs) at PNB's Brady House branch in Fort, Mumbai. The LoUs were opened in favour of branches of Indian banks for import of pearls for a period of one year, for which Reserve Bank of India guidelines lay out a total time period of 90 days from the date of shipment.
 
This guideline was ignored by overseas branches of Indian banks. They failed to share any document/information with PNB, which were made available to them by the firms at the time of availing credit from them.
 
Nirav Modi got his first fraudulent guarantee from PNB on March 10, 2011 and managed to get 1,212 more such guarantees over the next 74 months. 
 
The Enforcement Directorate (ED) recovered bank token devices of the foreign dummy companies used by the fugitive diamond trader to transfer the fraudulent funds.
 
The probe agency found that Nehal Modi, brother of Nirav Modi had destroyed the devices and had even secured a server located at United Arab Emirates (UAE) soon after the scam broke out. These dummy firms had been receiving the fraudulent PNB LoUs and were based out in British Virgin Island and other tax havens.
 
The enforcement agency has so far seized movable and immovable properties to the tune of Rs 2362 crore in the PNB fraud case.
 
How was the Punjab National Bank management oblivious to this?
 
PNB employees misused the SWIFT network to transmit messages to Allahabad Bank and Axis Bank on fund requirement. While all this was done using SWIFT passwords, the transactions were never recorded in the bank’s core system — thereby keeping the PNB management in the dark for years.
 
How did the scam unfold?
 
On 29 January 2018, PNB lodged a FIR with CBI stating that fraudulent LoUs worth Rs 2.8 billion (Rs 280.7 crore) were first issued on 16 January. In the complaint, PNB had named three diamond firms, Diamonds R Us, Solar Exports and Stellar Diamonds.
 
As of 18 May 2018, the scam has ballooned to over Rs 14,000 crore. 
 
Who is Nirav Modi?
 
Nirav Modi is a luxury diamond jeweller and designer who was ranked 57 in the Forbes list of billionaires in 2017. He is also the founder of the Nirav Modi chain of diamond jewellery retail stores.
 
Modi is the Chairman of Firestar International, the parent of the Nirav Modi chain, which has stores in key markets across the globe.
 
He has 16 stores in diverse locations such as such as Delhi, Mumbai, New York, Hong Kong, London and Macau.
 
He is currently in the United Kingdom and is seeking political asylum in Britain.

Latest Updates on PNB Scam

PNB scam: Bank seeks restoration of Nirav Modi's property worth Rs 71 cr

2 min read Last Updated :Jul 12 2023 | 11:39 PM IST
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PNB scam: PMLA court grants bail to Nirav Modi's close aide 'Subash Parab'

2 min read Last Updated :Apr 18 2023 | 9:00 PM IST
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Nirav Modi loses bid to go to UK Supreme Court against extradition to India

3 min read Last Updated :Dec 15 2022 | 11:33 PM IST
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Latest LIVE: Take back 'Amazon parcel': Thackeray asks Centre to recall Guv

2 min read Last Updated :Nov 24 2022 | 5:53 PM IST
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Dominica drops illegal entry charges against PNB scam accused Mehul Choksi

2 min read Last Updated :May 22 2022 | 3:55 PM IST
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Choksi moves Bombay HC seeking to keep in abeyance fugitive proceedings

2 min read Last Updated :Nov 20 2021 | 12:07 AM IST
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Nirav Modi UK extradition appeal to be heard on December 14

4 min read Last Updated :Oct 21 2021 | 2:33 AM IST
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Nirav Modi's brother-in-law appears before court for money laundering case

1 min read Last Updated :Sep 07 2021 | 6:51 PM IST
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Properties worth Rs 500 crore of Nirav Modi firms restored to PNB

2 min read Last Updated :Aug 27 2021 | 9:09 PM IST
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PNB scam: Mumbai court grants bail to Dhanesh Sheth, close aide of Choksi

3 min read Last Updated :Jul 13 2021 | 4:12 PM IST
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Dominica court grants interim bail to Mehul Choksi on medical grounds

2 min read Last Updated :Jul 12 2021 | 10:07 PM IST
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Dominica PM refutes claims of his govt involvement in Choksi's abduction

3 min read Last Updated :Jul 02 2021 | 9:03 AM IST
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Fugitive diamantaire Mehul Choksi: The first glimmers of fraud

6 min read Last Updated :Jun 24 2021 | 6:10 AM IST
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Banks realised 40% loss in Mallya, PNB cases via sale of seized stock: ED

2 min read Last Updated :Jun 23 2021 | 1:29 PM IST
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Not aware of any conclusive proof regarding Choksi's abduction: Antigua PM

3 min read Last Updated :Jun 23 2021 | 7:55 AM IST
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Choksi siphoned off Rs 6,345 crore PNB loan through Hong Kong firms: CBI

4 min read Last Updated :Jun 17 2021 | 3:44 AM IST
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PNB scam: CBI files supplementary chargesheet against Gitanjali ex-official

6 min read Last Updated :Jun 16 2021 | 11:59 PM IST
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Long wait for the next flight to Dominica

5 min read Last Updated :Jun 16 2021 | 11:33 PM IST
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Choksi's lawyers say he misses court date in Dominica due to mental stress

2 min read Last Updated :Jun 15 2021 | 8:23 AM IST
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Barbara Jabarica's claims are bogus, says Mehul's wife Priti Choksi

3 min read Last Updated :Jun 10 2021 | 12:19 PM IST
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