PNB's haste closed all options to clear debt, Nirav Modi tells banks

Your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues, said Nirav Modi

Nirav Modi, the prime accused in the Rs 114-billion scam at Punjab National Bank (PNB), wrote to banks on Monday, saying the companies controlled by him were unable to clear their dues owing to actions taken in “haste” by PNB.

“In the anxiety to recover your dues immediately, despite my offer, your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts,” Modi said in his letter to banks.

He said the operations of his companies Firestar International Private Ltd (FIPL) and Firestar Diamond International Private Ltd (FDIPL) had effectively ceased owing to raids launched by investigative agencies, including the Enforcement Directorate and the Central Bureau of Investigation. 

He has asked the banks to pay salaries to 2,200 employees working in those firms.

“This has thereby jeopardised our ability to discharge the dues of the group to the banks. I would request you to permit salaries for FIPL and FDIPL to be paid for the 2200 employees from the balance lying in the current accounts. Our HR head will send you a breakup of the monthly salary,” Modi said.

He said the inventory, including assets and receivables, of FIPL and FDIPL and three other firms could have settled the pending dues to the banks. 

“However, now that stage appears to have passed, and there is generally panic,” he said, adding that the valuation of the firms stood at Rs 65 billion. He requested the banks to allow him to sell the Firestar group.

Modi said PNB had extended the buyers’ credit facility to the Modi group of companies for several years and “there has been no default on the part of any of these firms over all these years”. Modi said in the letter PNB had earned bank charges “to the tune of crores of rupees” on the buyers’ credit facility.

“The banks that have extended the money to the firm’s buyers have been receiving payment in full, with interest, in time all these year,” he said.

The letter stated FIPL and FDIPL were profitable units, had a high credit rating, and “have never been in default to any bank, and its bankers are fully secured”.

PNB Managing Director and Chief Executive Officer Sunil Mehta had said last week that Modi, in his email exchanges, had come up with “vague offers” to repay the amounts due and had not submitted a concrete plan.