PNB issues confidential Memo to banks after Nirav Modi fraud case

Two days before suspending 10 of its officials in connection with jewellery designer Nirav Modi fraud case, the Punjab National Bank (PNB) on Monday sent a caution notice to all the banks, informing about the modus operandi of the fraud.

The notice was sent to Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of lndia, Corporation Bank, Catholic Syrian Bank, Dena Bank, Dhan Laxmi Bank, lClCI Bank, IDBI Bank, lndian Overseas Bank, Indusind Bank, J & K bank, Karnataka bank, Karur Vysya Bank, Lakshmi vilas Bank, Oriental bank of Commerce, Punjab & Sindh Bank, Standard Chartered Bank, State Bank of lndia, State bank of Mauritius, Syndicate Bank, Union Bank of lndia, United bank of lndia, UCO bank, Vitala Bank, and Exim bank.

Meanwhile, Axis Bank on Thursday issued a letter to National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), notifying that it had undertaken transactions against Letters of Undertaking (LoUs) issued by other banks, with PNB in the past.

The letter further read, "Axis Bank is also an active participant in the secondary market for such transactions, and the bank had sold down all of the referred transactions."

Axis Bank requested PNB "to take note of the above and arrange to bring it to the notice of all concerned."

However, PNB had sent the notice after it was found that the fraud had been carried out by the perpetrators in collusion with the staff at one of the branches in Mumbai, wherein one junior level branch official unauthorisedly and fraudulently issued LoUs on behalf of some companies belonging to Nirav Modi group viz. Solar Exports, Steller Diamonds and Diamond R Us for availing buyers' Credit from overseas branches of Indian Banks.

The Central Bureau of Investigation (CBI) had on Monday booked Nirav Modi, his brother Nishal Modi and the officials of PNB, for allegedly cheating the bank to the tune of Rs. 280.7 crore.

The case against the famous jewellery designer comes after the Income Tax department raided Modi's offices in Delhi, Surat and Jaipur.

Meanwhile, the Enforcement Directorate (ED) today has raided premises of Nirav Modi nationwide, and registered a case under Prevention of Money Laundering Act (PMLA) against Nirav Modi and others in this connection.