‘PNB MD denied Nirav, Choksi plea for credit limit hike’

MUMBAI: Jeweler Nirav Modi and his uncle Mehul Choksi promoter of Gitanjali Gems, had last year sought an increase in credit limits from Punjab National Bank in a meeting with the bank’s MD & CEO Sunil Mehta. This was disclosed by Mehta in his statement to investigators.
Mehta told investigators that he turned down the request on the grounds that bank’s exposure to their companies was already too high. However, at that time the bank did not see any grounds to raise any red-flags although it turned out that the uncle-nephew duo were already defrauding the bank through fraudulent letters of undertaking (LoUs). It was only in January 2018 that the Rs 12,600 crore fraud was detected.

Mehta’s statement has been recorded separately by three central government agencies- Central Bureau of Investigation,, Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO).

Modi and Choksi had also attended a meeting of large borrowers called by Mehta after he took charge of the bank in May 2017. Subsequently the two met Mehta requesting higher credit limit. It is not clear whether they met Mehta separately or together. Mehta didn’t recall the exact date when the meeting happened said an officer, involved in the investigation.

At present, investigating agencies are seeking information from banks on the various loan and credit facilities availed by the Modi and Choksi groups. Investigators are also making inquiries on the role of supervisory authority of the bank and its failure to detect the fraud for so long. The bank claimed that it learnt about it in January, after which they filed a cheating case at CBI.

CBI has arrested 19 accused in the case, including bank employees and senior executive of companies controlled by Modi-Choksi, for defrauding PNB mainly fraudulent LoU and not using the money for which it was taken from the bank.