PNB scam updates: Gitanjali Gems to shut down completely; employees protest after being asked to leave

Nirav Modi has said PNB's ”overzealousness” shut the doors on his ability to clear the dues. He also said the dues were much less than what the bank has claimed. Auto refresh feeds In the complaint, PNB had named three diamond firms -- Diamonds R Us, Solar Exports and Stellar Diamonds -- saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers... Last week, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 280.70000000 were first issued on 16 January. At the time, PNB had said it was digging into records to examine the magnitude of the fraud. A retired PNB officer and a clerk have been booked by the CBI for helping Nirav Modi, his wife and relatives, a Times of India report said. PNB's retired deputy manager Gokulnath Setty and single window operator Manoj Kharat had issued eight letters of understanding (LoU) worth over Rs 2800000000 to Nirav’s company just three months before the former’s retirement, the report said. At the bourses, Gitanjali Gems plunged nearly 19% on reports over its involvement in the PNB fraud case in morning trade after the company came under scanner of various investigating agencies following the Punjab National Bank's declaration of nearly Rs 11,400-crore fraud. The stock today opened on a bearish note at Rs 48, then lost further ground to touch a low of Rs 47.50, down 18.94% over its previous closing price. The regulators are set to spread their net overseas as it has been found that credit was availed from various bank branches in Hong Kong on the basis of Letters of Undertaking (LoUs) issued by Punjab National Bank. The Reserve Bank and the Sebi are likely to approach their counterparts in Hong Kong for cooperation in the matter relating to the whopping over Rs 11,4000000000 fraud at public sector lender PNB where several entities have come under the scanner, officials said on Wednesday. This is the second consecutive day of decline for the stock. It had slumped 10% yesterday. The state-owned bank said it had detected a USD 1.77 billion (about Rs 11,4000000000) fraud in which billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from one of its branches for overseas credit from other Indian lenders. — PTI Shares of Punjab National Bank today extended its fall for the second straight session, falling as much as 9% in morning trade after the lender said it has detected a USD 1.77 billion fraud. The stock opened at Rs 137, then hit a low of Rs 133.45, down 8.47% over its previous closing price. On the NSE, the stock opened at Rs 137.60, then fell 8.57% to Rs 133.35. The CBI FIR itself lists out the details of the accused. The primary name is that of Nirav Modi who is listed as a partner in Diamond R US, Solar Exports and Stellar Diamonds. The CBI FIR dated 31 January, 2018 was based on a complaint filed by Avneesh Nepalia, the Deputy General Manager at Punjab National Bank. It alleged that the partnership firms mentioned in the complaint had gained an amount of Rs 280.700000000 rupees while the bank suffered a wrongful loss of the same magnitude. He addressed the row on Nirav Modi's photograph with Narendra Modi at the World Economic Forum 2018 in Davos, asking how there was no background check done on those posing with the prime minister. The AAP then asked why Nirav Modi was "part of a delegation" that accompanied the prime minister and sought response from the saffron party on the row. "We think he(Narendra Modi) is busier with speeches and speaking his 'Mann ki Baat'," one of the AAP leaders said. Speaking at a press conference, members of the Aam Aadmi Party mentioned Vijay Mallya and Nirav Modi, and claimed that before any such businessman becomes a fugitive, he is "seen hanging around the BJP office". He said, "I want to say one thing clearly. No one will be spared. This will be regardless of the status and the status of the accused," "Till now, both the CBI and ED has taken speedy action in the wake of complaint made to the CBI. Till now, CBI has raided nine properties belonging to Nirav Modi 3 in Surat, 4 in Mumbai and 2 in Delhi. Assets worth 13,000 has been seized and action has been taken to revoke his passport. Look out notice has been issued," Union minister Ravi Shankar Prasad said on Wednesday. He further said that "very good photographs of the Congress leaders with Mehul Choksi is available with us." "But we don't want to stoop to that level," he added. Union minister Ravi Shankar Prasad hit out at the Congress for linking Nirav Modi's fraud case to Narendra Modi. He said, "The BJP takes strong offence by calling someone 'chota Modi'. It is derogatory and scandalous. Nirav Modi was not the part of the delegation at Davos. He reached there on his own." "Narendra Modi's shadow will not be harmed because of Randeep Surjewala or Congress. He is loved by the people. and what kind of language is Congress using? 'Chota Modi' jibe is shameful, condemnable and utterly irresponsible," Ravi Shankar Prasad said on Wednesday. The agency issued a look out circular against all the four after registering the first FIR against them, they said. His brother Nishal, a Belgian citizen, also left the country on 1 January, while wife Ami, a US citizen, and business partner Mehul Choksi, who is the Indian promoter of Gitanjali jewellery chain, departed on 6 January, the officials said. The bank has sent two more complaints to the CBI on Tuesday, saying the scam was worth more than Rs 11,4000000000. Nirav Modi, a regular feature on the lists of rich and famous Indians since 2013, was booked by the CBI, along with wife, brother and business partner Choksi on 31 January, for allegedly cheating the state-run Punjab National Bank to the tune of Rs 2800000000. Nirav Modi, who is believed to be in Switzerland, was also present in a group photo of Indian CEOs with Prime Minister Narendra Modi, issued by the Press Information Bureau, in World Economic Forum on 23 January, six days before the bank sent its first complaint against him to the CBI, according to the officials. The CBI has sought revocation of the passports of billionaire jewellery designer Nirav Modi and his partner Mehul Choksi who are the main accused in alleged fraudulent transactions, officials told PTI. Nirav Modi, who holds an Indian passport, left India on 1 January, while his brother Nishal, a Belgian citizen, departed from the country on same day. "This (diffusion) is less formal than a notice but is also used to request the arrest or location of an individual or additional information in relation to a police investigation. A diffusion is circulated directly by an NCB (CBI in this case) to the member countries of their choice, or to the entire INTERPOL membership and is simultaneously recorded in Interpol’s Information System," the website of Interpol says. The ED on Friday issued summons for appearance to billionaire diamond merchant Nirav Modi and his business partner Mehul Choksi in connection with its money laundering probe, officials said. They said both Modi and Choksi were summoned under the Prevention of Money Laundering Act (PMLA) and asked to depose within a week's time. The notices were handed over to the directors of the firms of the two businessmen as they were not in the country. Secondly, ED investigators want to know whether these LoUs were even once — at any point of time over the past seven years — returned to the originating bank branch for verification, and if so, whether or not these transactions were flagged in the annual audit report of the bank’s foreign exchange department. Enforcement Directorate (ED) officials said they were baffled when the top boss of Punjab Nationa Bank claimed that the bank was both whistle-blower and victim. The ED has sought documents related to SWIFT payments as such transactions are verified to ascertain FEMA provisions. The verification sometimes takes a week before the final clearance is granted "When I opposed the Gitanjali Gems loan proposal, my fight with Allahabad Bank board got really intense and dirty. They tried to persuade, mollify and even threaten me but I said such loans to the corporates without recovery will only add to more non-performing assets. I also wrote to the Reserve Bank of India and secretary, financial services in the Ministry of Finance in my effort to warn them of a massive scam looming large. My request was to take immediate preventive action and keep a watch on all the companies linked to Choksi's firm, as they were accumulating loans without making payments to the bank," Dubey said. Although Firstpost could not independently verify the news, there have been several reports suggesting that Priyanka's management had alleged that she wasn't paid the amount the two parties had agreed on. A spokesperson for Priyanka Chopra said "There are speculative reports that Priyanka Chopra has sued Nirav Modi. This is not true. However, she is currently seeking legal opinion with respect to terminating her contract with the brand in light of allegations of financial fraud against Nirav Modi." Sources in the Finance Ministry are saying that the recapitalisation of the Punjab National Bank will not be impacted by the fraud case The Reserve Bank of India (RBI) must feel like Cassandra gifted with the ability to tell the future, but cursed that her prophecies would never be believed (she is a character in the Greek myth The Iliad, and sister of one of the main protagonists, Hector, Prince of Troy). The latest example is the Rs 11,0000000000 plus fraud perpetrated in a Mumbai branch of Punjab National Bank. It also said none of the overseas branches of India-based banks had shared with PNB any documents or information at the time of extending buyers’ credit to the companies. PNB said Nirav Modi had written to the bank but had yet to offer any formal proposal for a repayment. Banking sources have said several other banks who have extended loans based on the PNB LoUs that were later found to be fraudulent are at risk of losing money. Some of the banks say PNB is liable to pay since it issued the LoUs, although PNB, in a 12 February “caution notice” addressed to chief executives of 30 banks, including two foreign banks, said the other banks also have a share in the blame as they “overlooked” certain Indian central bank rules. PNB has said the transactions are “contingent” in nature, and it will decide on the liability based on the law and the genuineness of underlying transactions, reported Reuters. "If they fail to respond within the stipulated time it will be assumed that they have no response to offer and the MEA will go ahead with the revocation," the ministry said in a statement. The external affairs ministry suspended with immediate effect the passports of diamantaire Nirav Modi and his business partner Mehul Choksi for four weeks. The ministry gave them one week to respond why their passports should not be revoked. "The PNB management is blaming other banks for not sharing details of their due diligence done on Modi's business. The $1.8 billion fraud is done on non-fund based transaction. The PNB management has to clarify what kind of due diligence it had done while lending to Modi's firms a sum of Rs 1,7000000000," CH Venkatachalam, General Secretary at All India Bank Employees' Association (AIBEA) said. He also asked the PNB management to reveal what kind of due diligence was done on diamond trader Nirav Modi and his companies before extending a loan of Rs 1,7000000000. Only the naive would believe that just two officials were involved in the $1.8 billion fraud in Punjab National Bank (PNB) and that the whole bank was in the dark for the past seven years, said a top leader of a major bank union. The Sebi and stock exchanges have begun analysing the stock market trade details of all entities associated with Modi including Choksi, who has already been under scanner for various cases including a brokerage default incident. Incidentally, in July 2013, NSE in consultation with Sebi had debarred Gitanjali Gems chief and main promoter Mehul Choksi among others from trading, for securities market violations relating to trading in his company. Markets regulator Securities and Exchange Board of India (Sebi) has launched a probe into trading and disclosure related issues in the matter of Punjab National Bank and Gitanjali Gems in connection with over Rs 11,0000000000 banking fraud allegedly perpetrated by absconding Nirav Modi. Bank loan frauds have steadily increased as well, reaching Rs 176.34 billion in the latest financial year from Rs 63.57 billion in 2012-13, according to the data, which doesn’t include the PNB case. The figures expose the magnitude of the problem in a banking sector already under pressure after years of poor lending practices. Bad loans surged to a record peak of nearly $149 billion in 2017. Investors may have been shocked when one of India’s biggest banks disclosed a $1.77 billion fraud by a billionaire jeweller, but the central bank has recorded data that shows the problem runs far deeper and wider. At a press conference, Congress spokesperson Randeep Surjewala said that in the past 24 hours, the biggest fraud in India has been exposed. He added that the scam is worth Rs 21,3060000000 The Congress then played a video of one of Narendra Modi's 2015 address as evidence that he is familiar with Choksi. "Why is the Centre denying it?" asked Surjewala. "From 7 May 2015 to May 2017, everybody knew about the fraud. They were even informed that this fraudster will flee. It is likely that Prime Minister Narendra Modi knows Mehul Choksi," Randeep Surjewala said on Thursday. "Rahul Gandhi was at Nirav Modi's 2013 exhibition and immediately Allahabad Bank gets notified about the fraud. Dubey wrote to all the important ministries in the Centre at that time. Finance secretary instead suggested Dubey to resign. This is the story. We want to ask, who pressurised the finance secretary? This is a UPA 'ghotala'," Prakash Javadekar said at a press briefing. "All the wrong loans were sanctioned under the UPA government and it was passed on to us. We have not stopped any of the investigating agencies. This is one of the scams under the UPA. There is a difference between government scams and bank scams. They even have a party scam. It has come to light because of our alertness and our efforts to make banking systems transparent," Union minister Prakash Javadekar said at a press conference. Asserting that the Centre is "making sure" that the money will be recovered, Union minister Prakash Javadekar said, "What UPA did was destroy the banking system. Coal scam, 2G, CWG are all government scams and they are not comparable with Nirav Modi scam(which allegedly began at a bank)." At a press briefing, MEA spokesperson Raveesh Kumar said that Nirav Modi and other Indian CEOs were at Davos on their own. He further added that the Narendra Modi's impromptu meeting was not in any way an endorsement of Nirav Modi or his business. "The fact that an officer of the level of deputy manager, as is being reported in the media, could single-handedly wreck not only the country's second largest PSU bank but also several other lenders, shows how the risk management system is lacking in these entities and how a chain of command system was not there or was not followed,” said the chamber. The alleged fraudulent transactions from a single branch of the bank show how vulnerable Indian banks, especially PSBs, have become, with a dangerous potential contagion in the country's financial system, Assocham said. India Inc on Friday called for swift and strict action against the companies who have allegedly defrauded Punjab National Bank, while expressing concern over the vulnerability of lenders. During the investors' conference call, the bank chief reiterated that the incident was a standalone case. "We are looking at gaps in our existing controls, systems and trying to control them," he added. He said the bank was going through some problems but "we will fix it", adding that the bank "will not spare anyone" involved in the crime. "We will get back to normalcy within six months. Bank has the size and capacity to come out of the problem," Sunil Mehta, Managing Director and Chief Executive Officer of Punjab National Bank. told a investors' conference call on Friday. Despite the huge blow of $1.8 billion fraud, India's second largest public sector bank is hopeful of coming out of the problem in the next six months, according to its top official. "Some ripple effects are bound to happen and it (the fraud) will have some psychological impact on the mind of loan advancers. Whenever a banker is financing someone, he will be more cautious to check out whether there is any possibility of fraud or not. This could impact credit flow to the industry or lead to delay in extending advances," Gem and Jewellery Export Promotion Council (GJEPC) Regional Chairman (Eastern Region) Prakash Chandra Pincha said. However, they also said that in the wake of the fraud, the entire gems and jewellery industry should not be blamed or branded as "risky" industry. Jewellery traders and exporters are apprehending that "ripple effects" of the $1.8 billion fraud involving billionaire diamond trader Nirav Modi's companies could make lenders more cautious and impact credit flow to the industry to some extent, officials said here on Friday. "But with developments in the company going off-track, how much will it hold is something that time will decide," he added. "Price-wise, the way the stock of Gitanjali Gems has slipped and the kind of circuit that we are seeing, probably the sequence may continue for some days. From a support perspective, Rs 29-30 is a support," Sacchitanand Uttekar, Assistant Vice-President at Research for Tradebulls, said. The Central Vigilance Commission (CVC) has summoned senior officials from the Reserve Bank of India, the finance ministry and the Chief Vigilance Officer of Punjab National Bank (PNB), next week to assess how the fraud reported slipped past all the checks and balances in the system, The Hindu reported. Nirav Modi may be holding dual citizenship, according to The Tribune report. Modi and his brother Nishal grew up in Belgium. According to intelligence sources Nishal had surrendered his Indian passport and acquired Belgian citizenship, added the report. Congress leader Kapil Sibal, while taking dig at Prime Minister Narendrs Modi, said that the Chaukidar of the coutry is busy these days. "The situation which has arose today is because Chaukidar is sleeping. How can one say that the prime minister, finance minister did not know about the PNB fraud." Sibal said that banks gave loan even though there was no collateral. He asked the government why action was not being taken against loan defaulters. "If India's economic situations worsens, investors will lose trust. Nivar Modi scam can be called ease of doing business. We don't want this kind of ease of doing business," said the congress leader. He alleged that in 2015 there was a complaint file regarding the PNB issue but PMO replied that this had been 'dealt with'. "How was it dealt it? This proves that they were aware of all this," asked Sibal Sibal said that with ill-intentions, the BJP brought India's economy to its knees. "I challenge BJP to come and talk about UPA's governance and their governance," said the congress leader. The agency said that many old LoUs too were renewed in 2017. Nirav Modi and his relatives were rolling over the LoU money by getting them renewed, added the report. The CBI has said that a majority of the Letters of Understanding (LoUs) in the Punjab National Bank fraud were either issued or were renewed in the bank in 2017-18, The Indian Express reported. "Original sin in Nirav Modi fraud was committed in 2011. The Letters of Understand (LoU) hold good only for 90 days. But the accused PNB officer kept rolling the LoUs till he got retired. He didn't put details in banking system which lead to no one detecting the scam," Sitharaman said. BJP leader and defence minister Nirmala Sitharaman on Saturday, in a press conference, said that Congress' allegations against the Centre are misleading people. She said that repeating lies is a strategy being adopted by Congress. Nirmala Sitharaman said that the entire might of the government has been invoked to nab Nirav Modi. She said that Centre put all concerned authorities in action immediately after the PNB fraud came to light. "Adwait Holding owns a commercial property at Lower Parel, as it does elsewhere, which was rented by Firestone many years ago. Neither Adwait nor my family has any interest with Nirav Modi or Firestone. Firestone vacated Parel's Kamala Mills premises in December 2017," Singhvi further explained. "Nirmala Sitharaman and her colleagues are liable to civil and criminal defamation for making ignorant and patently false allegations," Congress leader Abhishek Manu Singhvi said according to ANI. "Neither my wife, sons nor me have anything whatsoever to do with Gitanjali or Nirav Modi's companies. The company was a tenant of a Kamala Mills properties owned by Adwait Holdings in which my wife and sons are directors," he added. ANI reports that the three accused are Gokulnath Shetty, then deputy manager of Punjab National Bank (PNB) and Manoj Kharat, SWO (single window operator) of PNB and Hemant Bhat, Authorised Signatory of the Nirav Modi Group of Firms. "Nirav Modi took away Rs 22,0000000000. The prime minister can teach kids how to take an exam for one and a half hours but he can't tell the country who is responsible for the money Nirav Modi took away. The prime minister must answer what is he going to do about it," Congress president Rahul Gandhi said after the Congress steering committee on Saturday. Rahul also rejected the BJP's charge that he has personal ties with Nirav Modi, saying they are trying to divert the issue. Speaking to CNN-News18, former executive of Gitanjali Gems, Santosh Srivastava slammed Mehul Choksi, who is now at the eye of the storm for siphoning off Rs 11,4000000000 from Punjab National Bank. "Choksi created an unprofessional institution. It was an one man show at Gitanjali. He threatened me when I decided to tell the truth," Srivastava said. News18 reported that CVC was not satisfied with the information given by top brass of the Punjab National Bank. According to the report, it wants vigilance officer of PNB to step in and report back on lapses. The CVC will also issue fresh guidelines to all banks. According to News18, at least six to seven employees are being questioned inside the branch by the Central Bureau of Investigation. According to the report, the CBI is investigating whether there are more people involved in the scam. FICCI, the representative body of Indian private companies has pushed for privatisation of public sector banks. Claiming that the recapitalisation of banks have had little impact on the health of public sector banking, FICCI believed that financial irregularities have been affecting India's image as a business friendly nation. Celebrity jeweller and prime accused in the alleged Rs 11,400-crore Punjab National Bank fraud Nirav Modi will be represented by advocate Vijay Aggarwal in the courts, said media reports on Monday. Aggarwal has previously represented a number of accused in the 2G spectrum allocation scam case. The Shiv Sena on Sunday attacked Prime Minister Narendra Modi over the multi-crore-rupee Punjab National Bank (PNB) scam and alleged that diamond czar Nirav Modi, who is at the centre of the scandal, had been a "partner" of the BJP and helped it collect funds for elections. Investigation agencies believe billionaire businessman may be in Dubai. According to India Today, the CBI may have got a tip-off from undisclosed sources and is currently seeking Interpol's help to nab Modi. According to News18, the government has written to RBI asking if lapses have been noticed on five counts. The report added that RBI's response is expected after due diligence with banks. The CBI is questioning Vipul Ambani, the Chief Financial Officer of diamantaire Nirav Modi's Fire Star diamond company, officials said on Monday. They said Vipul Ambani was holding the position for last three to four years. He is understood to be a relative of late Dhirubhai Ambani, reported PTI. According to a News18 investigation, the FIR filed by the CBI stated that eight LoUs were issued. However, the investigation claims that 150 LoUs were issued to Nirav Modi, the alleged mastermind of the 11,0000000000 scam. According to CNN-News18, the Rs.11,0000000000 scam is just the tip of the iceberg. One-hundred fifty LoUs (Letters of Understanding) and 233 foreign letters of credit were issued to Nirav Modi, the report said. In its latest complaint to the Central Bureau of Investigation (CBI), an exclusive copy of which is with Firstpost, the PNB gave vague responses to the investigators' questions and directed them to the in-house probe. The PNB has also contradicted itself by admitting that there are several loopholes in Letters of Undertaking (LoUs), which could have been easily detected. Even before the investigating agencies begin their probe, an in-house inquiry by state-owned Punjab National Bank (PNB), which was allegedly defrauded of Rs 11,3600000000 by diamond merchant Nirav Modi and his maternal uncle Mehul Choksi, has given a clean chit to its auditors and blamed foreign branches of Indian banks. The bank's Sethia to Modi-Choksi story spans almost 30 years. But, nothing about the PNB seems to have changed. It is still a ripe, rotten mango waiting to be plucked by those with smart brains and right connections. Much, much before our Mehul (Choksi) Bhai and his nephew Nirav Modi unburdened the bank of nearly Rs 11,0000000000 and counting, the PNB had found itself in a similar soup because of another high-flying businessman, the suave Rajendra Sethia. Enforcement Directorate (ED) sleuths are examining details of over 250 shell firms linked to Nirav Modi, his brother and Mehul Choksi, which they suspect were used to move ill-gotten financial assets after they defrauded state-owned Punjab National Bank of Rs 11,3600000000. These ghost entities, sources said, allegedly acted like a sleeper cell to launder money in India and abroad. Firstpost takes a look at the events that unfolded since 16 January when the Punjab National Bank first found out about the fraudulent transactions in what has now become the largest banking scam in Indian history. ED Director Karnal Singh has reached Mumbai to take over the probe into the Punjab National Bank fraud case, reports Moneycontrol . The report adds that the Enforcement Directorate might also issue Letters of Rogatory to Hong Kong and other nations where they suspect that funds were diverted The Central Vigilance Commission (CVC) has asked Punjab National Bank and finance ministry officials to submit a report on how the scam took place despite monetary regulations to avoid the same being in place. ANI reports that the commission has given the bank 10 days to formulate the report. Corporate frauds like the Nirav Modi scam, phenomenal rise in non-performing assets (NPAs), new provisions like bail-in under Financial Resolution and Deposit Insurance (FRDI) regime are a multi-pronged conspiracy aimed at weakening India's predominantly public-owned banking system. This would result in corporate appropriation of public savings besides diverting household savings into speculative investment to fuel market bubbles. Thus, the Nirav Modi scam is not an aberration. A tiny, decrepit room in Kalbadevi, a chawl in Kalyan, a run-down accommodation in Dahisar, and an old Amboli flat with barely any amenities are the registered residential addresses of directors appointed by the companies of wanted billionaire jeweller Mehul Choksi, reported Bombay Mirror . These people are actually ordinary employees and small-time retail investors who were persuaded by the companies to serve as top company members on paper. I-T department serves notice to Congress leader Abhishek Manu Singhvi for unaccounted payment to the tune of Rs 4.50000000 out of which only Rs 1.50000000 was paid in cheque.The notice was sent after transactions showed Singhvi had bought diamonds worth Rs 60000000.- CNN-News 18 International rating agencies Moody's Investor Service and Fitch Ratings today warned the scam-hit Punjab National Bank (PNB) of rating downgrades, citing likely net worth erosion and widening losses at the second largest state-run lender. The Rs 11,400-crore fraud—the biggest in the country's banking history—has raised questions on both internal and external risk controls at PNB as well as the quality of management supervision at the regulatory level considering that the fraud went undetected for several years, the agencies said.- PTI In a letter written to Punjab National Bank, Nirav Modi has accused the bank of destroying his brand and says the move has jeopardised his ability to repay banks, media reports said. "We want a discussion on the PNB fraud case in the ongoing session of the state assembly. We hope the ruling party won't have any objection. We will submit it very soon," Leader of Opposition and Congress MLA Abdul Mannan said.- PTI The Opposition Congress and CPM on Tuesday demanded a discussion on the Punjab National Bank fraud case in the ongoing session of the state Assembly. The ruling Trinamool Congress is yet to take a call on the issue and mocked Congress and CPM for staging walkout from the house during most of the discussions. Punjab National Bank's market valuation has slumped by Rs 10,9390000000 in five days, which is nearly equal to the massive Rs 11,384-crore fraud at the company, even as the stock made a marginal recovery today The stock had dropped in the previous four trading sessions. In the past one week, the stock has lost nearly 28% PNB's market valuation fell by Rs 10,938.780000000 to Rs 28,270.220000000 on Tuesday from Rs 39,2090000000 on 12 February. The company's scrip meanwhile staged a marginal recovery today ending 0.13% higher at Rs 116.55 on BSE. - PTI It is alleged that the issuance of Letters of Undertaking (LOUs) to Nirav Modi group firms without sanctioned limits started during his tenure. Jindal is presently posted as general manager, credit, at PNB's head office in New Delhi. It is alleged that Rs 11,4000000000 of LoUs were fraudulently issued to the firms of Nirav Modi and Choksi. The CBI has arrested a general manager-rank officer of the Punjab National Bank posted at the bank's head office in New Delhi connection with the alleged Rs 11,4000000000 fraud involving billionaire jewellers Nirav Modi and his uncle Mehul Choksi, officials said. The arrested accused, identified as Rajesh Jindal, was the head of the bank's Brady House branch in Mumbai during 2009-11. A Firstpost investigation into the Punjab National Bank-Nirav Modi fraud case shows that corruption has gone into the very bone and marrow of state-owned banks and this is not just a 'one-off' for several banks, including PNB and others like UCO and Canara, which have encountered exposure in the Modi-Mehul Choksi scam. Late night parties at plush farmhouses and hefty kickbacks to top bank officials are two 'compulsory' requirements for scamsters to access the loans from public sector banks that they fully know would turn into Non-Performing Assets (NPAs). In a statement, PHD Chamber said it is surprised how the bank's internal audit system failed to detect anomalies in transactions leading to the alleged fraudulent loans given out to the borrowers. PHD Chamber of Commerce and Industry on Tuesday expressed concern over what it termed as the "crisis" triggered in the banking industry following the fraud detected in state-run Punjab National Bank. A special CBI court on Tuesday remanded three officials of Punjab National Bank in police custody till 3 March. These three were arrested on Monday in connection with alleged fraud of Rs 11,3840000000, while observing that there is a possibility of their involvement in diverting the bank money. During the arguments over the custody of the trio, the CBI told the court that key accused Gokulnath Shetty, then deputy manager (now retired) of PNB, had told them that issuing of the Letter of Undertakings (LoUs) had been going on since 2008. Nirav Modi, the alleged kingpin of the Rs 11,4000000000 Punjab National Bank scam, is not absconding but is out on business, the diamond merchant's lawyer has told the media. "He has a global business and he went out of India for business purpose. Now his passport has been revoked. His family members, some of them are foreign nationals, also stay abroad most of the time," the lawyer, Vijay Aggarwal, was quoted as saying by DNA . This apart, there are RBI and government representatives on the boards of large banks who are supposed to keep an eye on all transactions and ensure that nothing goes amiss. "But it appears that all of them were sleeping when a fraud was developing," the banker added. Looking at PNB-like frauds, if someone thinks that there are no checks in place in the system, they are wrong. "There are checks but no one really cares," said a banker. "Besides daily checks, the bank also does concurrent audits, which happen concurrently throughout the year. Such fraud should have reflected there," the official said. Refusing to entertain a PIL filed by a lawyer seeking a probe by the apex court into the Punjab National Bank fraud case, the Supreme Court said it was "becoming fashionable" to run to the courts and it was only right to let the government complete its investigation. It also called such PILs "publicity interest litigations". Attorney General KK Venugopal has told the Supreme Court that the investigation is ongoing and an FIR has been registered. The court has fixed the next date of hearing for 16 March. The Reserve Bank of India (RBI), on quick action mode, has rolled out some strict measures in the aftermath of the Rs 11,4000000000 Punjab National Bank scam. An expert committee will be formed, while the central bank has also issued guidelines and safeguards that banks are meant to implement. The plea has asked for a special investigation team (SIT) to probe the banking fraud, allegedly involving billionaire jewellers Nirav Modi and Mehul Choksi. It has also sought a probe into the role of the top management of the Punjab National Bank (PNB). The PIL has made Punjab National Bank, Reserve Bank of India and the ministries of finance and law and justice as parties. It has sought a direction for initiation of deportation proceedings against Nirav Modi and others allegedly involved in the banking fraud, preferably within two months. Attorney General KK Venugopal, appearing for the Centre, said he was opposing the PIL on various grounds, including that an inquiry has started after the FIR was registered. A bench comprising Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud said it would not say anything on the matter now and listed the PIL filed by lawyer Vineet Dhanda for further hearing on 16 March. The Centre on Wednesday opposed in the Supreme Court a PIL seeking an independent probe and deportation of billionaire jeweller Nirav Modi in the over Rs 11,0000000000 PNB fraud case, saying an FIR has been lodged and a probe was on. In response to the prime minister's suggestion for ideas for his 28 January 'Mann ki Baat' programme, Rahul had urged him to tell the country about India's plans on stopping rapes, getting the Chinese out of Doklam and jobs for the youth. Rahul also labelled the prime minister's programme aired on All India Radio a monologue and said the country wants to hear him speak on billionaire diamond jeweller Nirav Modi and the Rafale "scam". Congress president Rahul Gandhi attacked Prime Minister Narendra Modi over his silence on the PNB bank fraud and the Rafale deal, saying sarcastically that he looked forward to his "sermon" on the issues in his "Mann ki Baat" programme. "We have adequate capital coupled with strong non core asset base," said the PNB tweet as multi-agency probe widened into the fraud. PNB also said that it has the capacity and capability to "handle the situation" and protect the interest of the institution. Earlier in February, the bank said that it has been hit by a fraud amounting to about $1.77 billion. The alleged fraud was affected by fraudulent Letter of Undertakings (LOUs) issued to firms of diamantaire Nirav Modi and Mehul Choksi. "Be rest assured we have a strong sovereign backing. The core strengths of the bank is the brand image with rich 123 years of existence, strong CASA base, stable asset quality and increased pace of digitisation," PNB said. Scam-hit PNB has assured investors and customers that it has a strong sovereign backing and adequate capital to deal with the situation in the aftermath of the Rs 11,4000000000 fraud. "We assure you that in your bank, it is business as usual," state-owned Punjab National Bank said in a tweet. "But, it appears that all of them were sleeping when a fraud was developing," said the banker. That apart, given the tremendous pressure on bankers to generate business, top-level officers often turn a blind eye to illegal business activities. This apart, there are RBI and government representatives on the boards of large banks who are supposed to keep an eye on all transactions and ensure that nothing goes amiss. For instance, the SWIFT messaging platform that was used by the perpetrators in the PNB case is subjected to a daily check by the branch manager, which is compulsory in any bank. Even if one imagines that this part failed, the branch manager has to do a daily tally of income and expenditure in the branch while one of the officers (not involved in the transactions) combs through the books to look for suspicious transactions, the official said. Looking at PNB-like frauds, if someone thinks that there are no checks in place in the system, they are wrong. "There are checks but no one really cares," said a banker who requested anonymity. He takes the example of the LoU (Letters of Undertakings) fraud in PNB. If a branch-level official does a transaction of this manner for a period of seven years, it can get caught at different levels if any of the checks in place triggered this illegal activity. The six were arrested on Tuesday in connection with two FIRs registered by the CBI involving Modi and his uncle Mehul Choksi, the owner of Gitanjali Gems. A special court in Mumbai on Wednesday remanded Vipul Ambani, the president (finance) of Nirav Modi's Fire Star Diamond, and five others in CBI custody till 5 March in connection with the Rs 11,4000000000 alleged fraud in Punjab National Bank (PNB). The 1.5 acre farm house in the uber rich neighbourhood at a stone's throw distance from Arabian sea was purchased by Modi in 2004 for Rs 320000000 for hosting special parties for his clientele to show case his precious jewellery collection, they said. The official also said that they have seized documents during searches at the office of Firestar at Peninsula Business Park in Mumbai's Lower Parel that "prove" that Ambani knew what was being done. The CBI official said the agency during its probe found that Ambani not only visited and met PNB's officials at the Brady House branch but also met other bank officials in Mumbai and New Delhi. "Ambani was fully aware of the fraudulent and illegal LoUs issued by Shetty who was a deputy manager at PNB's Brady House branch in Mumbai. (This was being done) in conspiracy and (under the) guidance of Nirav Modi and other employees of his firm," a senior CBI official told IANS in New Delhi. Vipul Ambani, an arrested aide of fugitive billionaire Nirav Modi, knew about the fraudulent and illegal Letters of Undertaking (LoUs) issued by the Punjab National Bank in the Rs 11,4000000000 fraud, CBI officials said on Wednesday. The ED, in the past few days, has raided showrooms of the Gitanjali Group at a number of locations in Patna, Muzaffarpur and Kishanganj and seized valuables worth0000000 of rupees. The jewellers, spread across towns like Patna, Bhagalpur, Muzaffarpur and Gaya, have been asked to surrender their stocks at the agency's zonal office in Patna, failing which they may have to face legal action, an ED official said. The Enforcement Directorate on Wednesday said it has identified 50 jewellers across Bihar with suspected stocks of the Geetanjali Group, which is under the scanner in the aftermath of the Punjab National Bank scam. The note sent by the bank’s head office in New Delhi to all regional offices on 17 February also stated any SWIFT message will have to be created, verified and authorised by three different officers, starting Thursday. Previously only two individuals were needed for the process. The new measures mean only PNB officers will be able to initiate messages on SWIFT, taking away the authority of clerks to do so. Several new limits have been placed on the amount that officers can generate depending on their seniority in the bank hierarchy. India’s state-run Punjab National Bank has stepped up its controls on the use of global payments network SWIFT following an alleged $1.77 billion fraud, according to memos issued this month and seen by Reuters. Looking at PNB-like frauds, if someone thinks that there are no checks in place in the system, they are wrong. "There are checks but no one really cares," said another banker who too requested anonymity. He takes the example of the LoU (Letters of Undertakings) fraud in PNB. If a branch-level official does a transaction of this manner for a period of seven years, it can get caught at different levels if any of the checks in place triggered this illegal activity. The instances of fraudulent transactions and loan scams involving bank officials continued. This included both and big and small frauds — Citibank fraud, Bank of Baroda forex scam, Syndicate Bank fraud and several other lesser-known scams. In most instances, the victims were public sector banks and culprits their own officials. Most cash-for-loan scams happened through middlemen. With Wednesday's seizure, the total value of gems and gold jewellery seized by the ED stands at Rs 5,7360000000. The agency has said it is carrying out an "independent valuation" of these seized assets. While the ED seized assets worth Rs 100000000 on Wenesday, the tax department said it has attached a total of 141 bank accounts and fixed deposits worth Rs 145.740000000 of the Nirav Modi group. The department said it has attached these assets to realise outstanding tax demands. The Enforcement Directorate (ED) on Wednesday continued raids for the seventh day as it visited 17 locations across the country, including four shell companies in Mumbai, even as the I-T department attached assets worth Rs 1450000000 in the alleged Rs 11,400-crore Punjab National Bank (PNB) fraud. It fell for sixth consecutive session on Wednesday. The stocks of the jewellery company plunged by 9.85% to close at the lower circuit of Rs 27.45 per share on Wednesday. Market capitalisation of the company stood at Rs 325.600000000, down from Rs 695.080000000. On the other hand, Bipasha Basu, who endorsed Gili, accused the Gitanjali Gems group of using her photographs even after her contract expired. According to News18 , the actresses have accused Mehul Choksi-owned Gitanjali Gems of non payment of dues and breach of contract. A spokesperson for Ranaut said, "There are outstandings due on Kangana’s Nakshatra endorsement, beyond the stipulated contract." She was the company's brand ambassador since 2016 and claims she has not been paid her dues fully for endorsing the jewellery brand. Laws which govern the functioning of RBI need to be changed to bring about transparency and accountability. This has to then be supported by scrutiny into the functioning of the institution. A tragedy is a terrible thing to waste. The legislature should take a relook at the legislative framework of transparency, accountability and governance of RBI. The Draft Indian Financial Code addresses many of these concerns and there is need to incorporate its principles in primary legislation. Various process failures of public sector banks in India are not new. What is new in the PNB fraud is that, for the first time, questions are being raised about the supervisory capacity and systems in Reserve Bank of India (RBI). The government has written to the RBI asking for why the scam was not detected in its systems. Concerned citizens have asked for similar information in the past and disclosures by RBI have not been adequate. The ED on Thursday said it has frozen mutual funds and shares worth Rs 94.520000000 of the Nirav Modi and Mehul Choksi groups in connection with a money laundering probe against them in the Rs 11,400-crore alleged fraud at the Punjab National Bank (PNB). In its note, the agency has made a startling revelation that even top officials of the PNB beginning with the zonal to head office was aware of the business dealing with Nirav Modi's companies and the assertion that top officials were ignorant has been neutralised by the probe agency. For hours on Wednesday, sleuths from the Central Bureau of Investigation (CBI) were frustrated as they were trying to find out how fake Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) running into000 of0000000 was drafted and subsequently sanctioned by the Punjab National Bank (PNB) officials. The two executives of Nirav Modi admitted to preparing and signing the applications made to PNB but they refused to disclose details how and where such applications were finalised. A special CBI court in Mumbai on Wednesday sent to police custody, till 5 March, five senior executives of the Nirav Modi and Mehul Choksi Group of Companies, including Vipul Ambani, who were arrested on Tuesday in conection with the Rs 11,4000000000 Punjab National Bank fraud. On the other hand, Bipasha Basu, who endorsed Gili, accused the Gitanjali Gems group of using her photographs even after her contract expired. According to News18 , the actresses have accused Mehul Choksi-owned Gitanjali Gems of non payment of dues and breach of contract. A spokesperson for Ranaut said, "There are outstandings due on Kangana’s Nakshatra endorsement, beyond the stipulated contract." She was the company's brand ambassador since 2016 and claims she has not been paid her dues fully for endorsing the jewellery brand. Laws which govern the functioning of RBI need to be changed to bring about transparency and accountability. This has to then be supported by scrutiny into the functioning of the institution. A tragedy is a terrible thing to waste. The legislature should take a relook at the legislative framework of transparency, accountability and governance of RBI. The Draft Indian Financial Code addresses many of these concerns and there is need to incorporate its principles in primary legislation. Various process failures of public sector banks in India are not new. What is new in the PNB fraud is that, for the first time, questions are being raised about the supervisory capacity and systems in Reserve Bank of India (RBI). The government has written to the RBI asking for why the scam was not detected in its systems. Concerned citizens have asked for similar information in the past and disclosures by RBI have not been adequate. The ED on Thursday said it has frozen mutual funds and shares worth Rs 94.520000000 of the Nirav Modi and Mehul Choksi groups in connection with a money laundering probe against them in the Rs 11,400-crore alleged fraud at the Punjab National Bank (PNB). In its note, the agency has made a startling revelation that even top officials of the PNB beginning with the zonal to head office was aware of the business dealing with Nirav Modi's companies and the assertion that top officials were ignorant has been neutralised by the probe agency. For hours on Wednesday, sleuths from the Central Bureau of Investigation (CBI) were frustrated as they were trying to find out how fake Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) running into000 of0000000 was drafted and subsequently sanctioned by the Punjab National Bank (PNB) officials. The two executives of Nirav Modi admitted to preparing and signing the applications made to PNB but they refused to disclose details how and where such applications were finalised. A special CBI court in Mumbai on Wednesday sent to police custody, till 5 March, five senior executives of the Nirav Modi and Mehul Choksi Group of Companies, including Vipul Ambani, who were arrested on Tuesday in conection with the Rs 11,4000000000 Punjab National Bank fraud. Mumbai Throwing up his hands, beleaguered businessman Nirav Modi, the alleged kingpin of the largest banking scam in the country's history, has said Punjab National Bank's ”overzealousness” shut the doors on his ability to clear the dues. He also said the dues were much less than what the bank has claimed, and that his relatives booked in the cases filed by the central agencies had nothing to do with the operations of the firms under their scanner. In a letter Modi wrote on 15/16 February the Punjab National Bank management, a copy of which PTI has seen, he pegged the money his companies owe to the bank under Rs 5,0000000000. "The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns. This thereby jeopardised our ability to discharge the dues of the group to the banks," Modi, who left the country along with his family in the first week of January, before the alleged scam became public, wrote in the letter. "In the anxiety to recover your dues immediately, despite my offer (on 13 February, a day before the public announcement, and on 15) 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,"he said. The letter also refers to the extended discussions between him, and between his representatives and the bank officers, besides his emails of 13 and 15 February, 2018. PNB, the second largest state-run bank, had, on 14 February, informed the exchanges about detecting $1.77 billion fraud at its Brady House branch in Mumbai, and named the firms led by Modi and his uncle Mehul Choksi's Gitanjali Group, and some other diamond and jewellery merchants as suspects. Central government agencies — the CBI and the Enforcement Directorate — have registered cases on the complaint by the bank, and launched nationwide searches on dozens of offices and residences of the alleged fraudsters. The bank has named Modi's brother, his American wife Ami, and uncle Choksi besides some others in the FIR. On the over Rs 11,000-crore loss claimed by the PNB in the FIR, Modi said, "As you are aware, this is entirely incorrect and the liability of the Nirav Modi Group is substantially less. Even after your complaint was filed, in good faith I wrote to you saying please sell/allow me to sell Firestar Group, or their valuable assets, and recover the dues not just from Firestar Group, but also from the three firms." Valuing his domestic business at around Rs 6,5000000000, he said, "This could have helped reduce/discharge the debt to the banking system," but added that this is not possible as all his bank accounts have been frozen and assets sealed or seized. He went on to state that PNB had time and again acknowledged that the buyers credit facility has been extended by it to the three partnership firms for several years, and that there has been no default on the part of any of these firms over all these years. He said that money went through PNB all these years for the repayments of the advances given by the overseas bank branches under the buyers credit. "That Firestar International and Firestar Diamond International have never been in default to any bank, and the bankers are fully secured". He also said that PNB has over the years been earning bank charges to the tune of0000000 of rupees on the buyers credit facility extended by PNB to the three partnership firms and that PNB has extended the money to the firm's buyers as well from where also it has been receiving full payments, with interest and on time all these years. On the valuables that CBI/ED searches yielded Rs 5,6490000000, he said, "These, and other assets of the group and the three firms could have settled all the amounts due to banks. However, now that stage appears to have passed." He concluded by requesting the bank to "be fair, and support my efforts to make good all the amounts that are found due by my group to all banks." Owning up everything, he said the bank has wrongly named his brother, who is not at all concerned with the operations of the three firms or other companies. "My wife is not connected with any business operations at all and she has been wrongly named. My uncle is also wrongly named in this complaint since he has an independent and unconnected business and none of them are aware or concerned with my dealings with your bank. Whatever may be the consequences I may face for my actions, the haste was, in my humble submission, unwarranted," Modi concluded and requested the bank to permit him to pay the salaries to 2,200 employees from the balance lying in the current accounts of his firms.