Who Is Nirav Modi? The Jeweller, Accused Of Rs 11,300 Crore Punjab National Bank Fraud

While we were wondering how to file our income tax returns and deposit the premiums of our insurance policies, a jeweller?named Nirav Modi, had finished fraudulent transactions worth Rs 11,300 crores from the Mumbai branches of Punjab National Bank (PNB) second-largest money lender in India.?

It is not just PNB that has been affected by the fraud, six other lenders including Allahabad Bank, Axis Bank and Union Bank which lent money based on PNB's letters of undertaking have also been hit.

AFP

Even though PNB in its letter did not reveal the names of people involved in the fraud, the Central Bureau of Investigation (CBI) received two complaints from PNB against billionaire diamantaire Nirav Modi and a jewellery company alleging fraudulent transactions worth about Rs 11,300 crore. This is in addition to the Rs 280 crore fraud case that he is already under investigation for.

Who is Nirav Modi?

Nirav Modi is a diamond jewellery designer, who has his own global jewelry house. He comes from a family of diamond merchants and established his own brand after his name in 2010. The 46-year is also the Chairman of Firestar International.?

In 2017 he was ranked the 57th richest man in India by Forbes. Modi is the nephew of Gitanjali Gems owner Mehul Choksi, who was booked along with him in the first PNB fraud case. After the PNB FIR he is said to have fled India.

When and how did the fraud happen?

According to PNB, Modi approached the bank which issued a letter of undertaking (LoU), which is a bank guarantee for a client, agreeing to unconditionally repay the principal and interest on client’s loan. The client could be an importer who uses funds or credit limit with an Indian bank to get cheaper foreign currency loans.

AFP

According to the CBI, two PNB officials, deputy manager, Gokulnath Shetty and SWO Manoj Hanumant Kharat were the two bank officials behind the fraud.Shetty used his access to the SWIFT messaging system used by banks for overseas transactions to authenticate guarantees given on LoUs without any sanctions, thus the transactions remained unnoticed so far.

It came to light only after other lenders approached PNB after the LoUs matured seeking repayment, only to find out that it was fraudulent.

How big is it?

In simple terms it is huge. Rs 11,000 crore is nearly one-third of its total market capitalisation of Rs 35,365 crore and 2.55 per cent of the total loan book of Rs 4.5 lakh crore as of December 2017.