Indian banks may lose Rs. 19,000cr in PNB-fraud: I-T Dept
The Income Tax Department stated Indian banks could lose Rs. 17,632cr from loans and corporate guarantees provided to Punjab National Bank in the Rs. 11,400cr fraud. In a note, the I-T Department said banks gave Rs. 17,632cr-worth loans and guarantees to high-profile jewelers Nirav Modi and his uncle Mehul Choksi as of Mar'17. The amount may exceed Rs. 19,000cr now, it added. Here's more.
Banking fraud involved two junior PNB officials
The Rs. 11,400cr scam involved two junior PNB officials at a Mumbai branch that issued "letters of undertaking" to companies linked to Nirav Modi and Choksi for them to get credit from overseas branches of other Indian banks, according to PNB's complaint. The LoUs weren't recorded on PNB's internal software but transmitted through SWIFT interbank messaging system to avoid early detection of fraud.
I-T Dept's preliminary investigation into PNB fraud case
I-T Department prepared an internal note as part of its preliminary investigation into PNB scam, the biggest Indian banking fraud case. It said Choksi's Gitanjali Gems and subsidiaries dealt with 32 lenders. Banks that offered credit to Modi-Choksi included Union Bank of India, Allahabad Bank, and Axis Bank. State-run UBI has an exposure of Rs. 1,932cr while Axis Bank sold all the fraud-related exposure.
People of limited means listed as majority partners: I-T Dept.
The I-T Department's initial findings show that many companies involving Nirav Modi and Mehul Choksi had listed people of limited means as majority partners. However, the tax department didn't name any such people. It said the total loans in three Modi-led firms -Stellar Diamond, Solar Exports, and Diamonds R' Us- amounted to Rs. 3,992cr while the partners' total capital was only Rs. 400cr.
Trade receivables of Modi's firms higher than total turnover
I-T Department's note says the trade receivables of Modi's three firms -Stellar Diamond, Solar Exports, and Diamonds R' Us- or the amount these companies were billing the customers was "much higher than total turnover of the three companies involved in the fraud." It added this "shows that goods are being sold for related party and are either over-invoiced or not coming at all."
Passports suspended; Rs. 5,600cr assets seized in raids
The Enforcement Directorate is conducting raids linked to the scam across India. Authorities earlier said a total of Rs. 5,649cr-worth assets were seized in the raids (as on 15 February). Also, External Affairs Ministry suspended the passports of Nirav Modi and Choksi for four weeks. They have left India in January. Modi was reportedly seen at New York's luxurious JW Marriott's Essex House.
First arrests in PNB fraud case made by CBI
On 17 February, the CBI arrested PNB's former Deputy Manager Gokulnath Shetty, Single Window Operator Manoj Kharat, and the authorized signatory of Nirav Modi Group of Firms Hemant Bhat in connection to the alleged Rs. 11,400cr banking fraud by Nirav Modi and Mehul Choksi. Shetty is the co-accused in the case in which high-profile jeweler Nirav Modi is the prime suspect.
