RBI denies giving instruction to PNB over Nirav Modi fraud

The Reserve Bank of India (RBI) on Friday denied giving any instruction to the Punjab National Bank (PNB) over Nirav Modi fraud.

Jose J. Kattoor, Chief General Manager, RBI, in a statement said, "There have been reports in the media that in the wake of fraud involving a sum of USD 1.77 billion that has surfaced in PNB, the RBI has directed PNB to meet its commitments under the Letter of Undertaking (LoU) to other banks. The RBI denies having given any such instructions."

Kattoor added the fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls.

"RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action," Kattor said.

The PNB has lodged two financial fraud complaints of Rs. 11400 crore and Rs 280 crore against Nirav Modi, his family members and Mehul Choksi.

The CBI filed a formal case charging four, Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi on January 31 over Rs. 280 crore fraud.