While the nation’s banks are still struggling with the NPA’s of Business people like Vijay Mallya and Lalith Modi, yet another scam that came into light is that of Nirav Modi.
Who is Nirav Modi?
Nirav Modi is the founder and owner of the Nirav Modi Group(founded in 2010) which deals with jewelry and diamond trading. He also owns companies like Diamonds R OS, Stellar Diamonds & Solar Exports.
When did this scam start?
This is not a new scam though it came into light recently. It’s being done since 2011 i.e. with in one year of establishment of the company. One cannot say the scam is a result of negligence of the NDA govt since it had also occurred in the UPA govt. The scam had occurred and had been occurring till recently.
How much does this scam account for?
Around 11000 crore.(OMG… that’s huge!!)
How did this scam happen?
This scam started in 2011 and till 2017 the company of Nirav Modi made about 8 different LOU(letter of undertaking) from Punjab National Bank in a fraudulent way and took loans of huge amounts from foreign banks.(Well it is’nt that easy without involvement of the bank officials).
What is LOU?
It is Letter Of Undertaking which is given from a bank as a guarantee to the loans taken from other banks. It means when the person who took the loan is unable to repay it, the bank which has given LOU will repay the loan with interest.
When and how did PNB came to know about the scam?
In 2017 when the foreign banks(which were mostly overseas branches of Indian banks) approached or contacted PNB regarding the repayment of loans, the bank(PNB) realized it and filed a complaint in CBI.
Is the government unaware of this scam?
This question is common to arise when the scam is happening over such a long period of time.
In 2016 a whistleblower by name Hariprasad sent a letter explaining the scam in a detailed way to the PMO inspite of which no prior action had been taken from CBI/SEBI/PMO. He got a response from ROC(Registrar of Companies) that the case had been closed.
What is the action taken by CBI regarding the scam?
CBI has taken into custody round about ten people of which two are prominent. Gokulnath Shetty and Manoj Kharat. Other names which were listed in the complaint are Mehul Choksi(uncle of Nirav Modi and owner of Gitanjali diamond group), Ami Modi(wife of Nirav Modi) & Neeshal Modi(brother of Nirav Modi).
About 20 bank officials got suspended and the sources say that they will also be interrogated by CBI.
Neeshal Modi is the husband of Ishita(niece of Mukhesh Ambani). We know how close PM Narendra Modi and Mukhesh Ambani are.
There are situations when PM Modi referred Mehul Choksi as bhai(brother)
Where is Nirav Modi and his family now?
According to certain reports they fled the nation and they might be in United States now.
Would it be possible for the govt to stop Nirav Modi from leaving the country?
The govt could stop Nirav Modi
The govt could stop Lalith Modi
The govt could stop Vijay Mallya
The govt could stop Anderson(owner of Union Carbide Pesticide Plant responsible for Bhopal gas tragedy 1984).
But it din’t. Live example of the power of a country in stopping a person from boarding a flight was given when the government stopped Priya Pillai( a greenpeace activitist from boarding London flight at Delhi Airport.
Is it possible for PNB to recover from such a heavy NPA?
NPA is Non performing Asset which is used to term the loans when the borrower fails to make interest or principal repayments with in 90 days of final date.
PNB has recently received 5500 crores as a recapitalisation amount from the government. But the scam amounts more than that. It is quite difficult for any bank to recover from such a huge NPA.
Not only PNB but other banks like SBI also had to face the losses but not that much the PNB faces.( Pity on you PNB!!)
Not only these but there are many scams related to banking had occurred since 2011. There detailed information according to a report by Times of India is furnished below.
Here are some of the biggest scams that shook the country’s banking system and raised several questions:
2011
– In 2011, investigative agency CBI revealed that executives of certain banks such as the Bank of Maharashtra, Oriental Bank of Commerce and IDBI created almost created 10,000 fictitious accounts, and an amount of Rs 1.5 billion or Rs 1,500 crore worth loans was transferred.
2014
– Three years later in 2014, Mumbai Police filed nine FIRs against a number of public sector related to a fixed deposit fraud to the tune of Rs 7 billion or Rs 700 crore. In the same year, Electrotherm India, which defaulted payment of Rs 4.36 billion or Rs 436 crore to the Central Bank. Apart from that, Bipin Vohra, a Kolkata-based industrialist allegedly defrauded the Central Bank of India by receiving a loan of Rs 14 billion using forged documents.
– Besides, another scam that was unfolded in 2014 was the bribe-for-loan scam involving ex-chairman and MD of Syndicate Bank SK Jain for involvement in sanctioning Rs 80 billion or Rs 8,000 crore.
– In 2014, Vijay Mallya was also declared a willful defaulter by Union Bank of India, following which other banks such as SBI and PNB followed suit.
2015
– In 2015, another fraud that raised eyebrows involved employees of Jain Infraprojects, who defrauded Central Bank of India to the tune of over Rs two billion. In the same year, employees of various banks were involved in a foreign exchange scam involving a phony Hong Kong corporation. They had defrauded the systems to move out Rs 60 billion.
2016
– One of the biggest banking frauds of 2016 is the one involving Syndicate Bank, where almost 380 accounts were opened by four people, who defrauded the bank of Rs 10 billion using fake cheques, LoUs and LIC policies.
2017
– In 2017, Mallya’s debt – owing to defunct Kingfisher Airlines – rises to Rs 9.5 billion or Rs 9,500 crore to IDBI and other bank branches. CBI prepares chargesheet but he had fled the country in 2016. Currently residing in the UK, Mallya’s extradition is being sought at the country’s Westminster Court.
– In the same year, Winsome Diamonds – also known to be India’s second largest corporate defaulter – came under the scanner after CBI booked six cases against the group and the companies under it. This case is similar to the one observed in the fresh bank fraud involving Nirav Modi group: Letters of Undertaking were issued by Indian Banks to Jatin Mehta’s Winsome Diamonds. It may be noted that the gaps were first discovered in 2014. From mid-2013 the group failed to payback its debts, and was declared a willful defaulter by banks. The total debt amounts to almost Rs 7,000 crore.
– Another case that grabbed eyeballs in the same years involved Deccan Chronicle Holdings for causing a loss of Rs 11.61 billion; CBI registered FIR against five PSBs and six chargesheets were filed against the company.
– A Kolkata business tycoon Nilesh Parekh, a promoter of Shree Ganesh Jewellery House, was arrested by CBI in 2017 for causing a loss of Rs 22.23 billion to at least 20 banks. Parekh, arrested at Mumbai airport last year, allegedly defrauded banks by diverting loan money via shell companies in Hong Kong, Singapore, and the UAE.
– In this case, CBI filed a case against the former zonal head of the Bank of Maharashtra and a director of a private logistics company based in Surat, owing to an alleged scam involving Rs 8.36 billion.
2018
– Last but not the least by any means, the fresh bank fraud to the tune of Rs 11,450 crore involving diamond merchant Nirav Modi which is all this blog is about.
– Another case that came to light this year concerns a former Andhra Bank director, who was arrested by Enforcement Directorate, in connection to an alleged Rs 5 billion bank fraud case, involving a Gujarat-based pharma firm.
Why should I know this?
It becomes the responsibility of young India to know what is happening in the country since it forms the bulk of Indian population and it is the one on which the future of India is built upon.
Source: web
– praneeth chidura
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Very well explained article. I agree it’s important for Indians to know about this.
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