All about PNB's plan to stake claim in Modi's company
In a bid to recover defrauded amounts going up to Rs. 13,000 crore, the Punjab National Bank (PNB) is looking to take part in the bankruptcy proceedings of Nirav Modi's firm, Firestar Diamonds. It had filed for insolvency in a New York court last month. According to sources, PNB is in the process of hiring legal experts for the job. Here are the details.
The largest banking fraud in Indian history
Nirav Modi and his uncle, Mehul Choksi, in connivance with officials from Punjab National Bank, allegedly defrauded the bank of Rs. 12,698 crore through fraudulent letters of undertaking (LoUs) since March'11. It has been touted as the largest banking fraud in the history of India.
What we know about PNB's plans so far
Sources said that a legal firm would be hired soon to represent PNB in the bankruptcy proceedings of Firestar Diamonds which will be overseen by the US Trustee Program, that has jurisdiction over administration and litigation for enforcement of the bankruptcy law. However, PNB refused to comment on the issue when contacted by The Economic Times.
Repayment against LoUs issued to Modi & Co. unknown
PNB had issued as many as 1,590 letters of undertaking (LoUs) to Nirav Modi, Mehul Choksi, and their associates. As of now, the amount of repayment made by their companies against each LoU is unknown, and is being looked into as part of the multiple ongoing investigations. Following the scam, the RBI stopped banks from issuing LoUs and letters of comfort for trade finance.
