PNB fraud case update: Whereabouts of Nirav Modi, ED raids, clarifications & more

An LoU is an assurance given by one bank to another to meet a liability on behalf of a customer. Image source: PTI

The Rs 11,400 crore financial fraud in Punjab National Bank (PNB) has snowballed, and has taken under its shadow a couple of banks and jewellery firms, and has also given us a poster boy of the scam named Nirav Modi. Modi is a luxury diamond jewellery designer who was ranked 57 in the Forbes list of billionaires in 2017.

To tell you the fraud in brief, PNB had filed an FIR with the Central Bank of India (CBI) on January 31 against six people including Nirav Modi, alleging two of its employees “fraudulently” issued LoUs worth Rs 280.7 crore and “transmitted SWIFT instructions to the overseas branches of Indian Banks” to raise buyers’ credit for Modi’s firms, Diamond R US, Solar Exports, and Stellar Diamonds, without making entries in the bank system.

The public sector bank on Wednesday further detected fraudulent transactions amounting to more than Rs 11,000 crore from one of its branch in Mumbai.

"The transactions were "for the benefit of a few select account holders with their apparent connivance" and that "based on these transactions other banks appear to have advanced money to these customers abroad," the bank said in a regulatory filing to BSE.

PNB received funds from various banks via LoUs in its Nostro account. An LoU is an assurance given by one bank to another to meet a liability on behalf of a customer. LoUs are used in international banking transactions. Nostro account is an account that a bank holds in a foreign currency in another bank.

The other banks under scanner are Allahabad Bank, Axis Bank, SBI, Union Bank and Bank of India.

As the events around PNB fraud are under progress, we get you all the latest developments that have happened so far:

1) The bank is doing its best to punish the wrong doers, says Sunil Mehta, MD, Punjab National Bank

2) Informed agencies, other banks immediately on fraud case, says MD Mehta

3) PNB plans strong action against clients, employees involved, says MD Mehta

4) Bank will honour ‘all bona fide’ commitments, says MD Mehta

5) Fraud started in 2011, we were the first bank to detect and report it, says PNB management in the press conference.

6) PNB stock is trading over 6 per cent lower as the press conference goes on.

7) Nirav Modi left the country even before the scam was detected. He could be in Switzerland, according to sources.

Also Read: Who is Nirav Modi?

8) Enforcement Directorate (ED) conducted multiple searches at Modi's residence in Kurla, his jewellery boutique in Kala Ghoda area, three company locations in Bandra and Lower Parel, three premises in Surat in Gujarat and Modi's showrooms in Chanakyapuri and Defence Colony in Delhi.

Also Read: PNB cautions other banks about modus operandi of fraud

9) The ED had filed a case under the Prevention of Money Laundering Act (PMLA) after going through a CBI FIR registered early this month.

10) ED raided offices of PNB and Gitanjali Gems and residences of ten suspeneded PNB bank officials.

11) NSE has sought clarification from Gitanjali Gems.

12) PC Jeweller issued a clarification, saying its has nothing to do with the frand in PNB. "The company doesn't have any international transactions in diamonds. It procures all its diamonds from local markets on cash basis only," it said.

13) Axis Bank clarified, saying it had sold all its LoUs before the issue surfaced.

14) PNB cautioned other banks about the modus operandi of the scam.

Also Read: Enforcement Directorate raids in Nirav Modi-PNB Rs 280 crore fraud PMLA case

15) PNB fraud has taken sheen out of jewellery stocks. Gitanjali Gems, PC Jeweller dipped up to 24 per cent on the BSE.

Also Read: PNB fraud takes sheen out of jewellery stocks; Gitanjali Gems, PC Jeweller dip up to 24%

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