Here’s everything you wanted to know about the Rs 12,600 crore PNB fraud and its aftermath

If the PNB scam was confounding, the spate of investigation details can be even more so. Here’s everything you wanted to know about the Rs 12,000 crore fraud and its aftermath.

HOW IT BEGAN
A police complaint was filed by PNB (late January) against Nirav Modi and Mehul Choksi for defrauding the bank of Rs 281 crore by colluding with some bank officials. The probe was later taken over by CBI. Last month, PNB revised the amount involved in the fraud to Rs 12,600 crore (around $1.9 billion).

HOW THEY DID IT
Officials at PNB’s Brady House branch in Mumbai issued LoUs (letters of undertaking) to enable companies belonging to Modi and Choksi to access forex credit from other Indian banks abroad. They neither sought any collateral nor did they record LoU issuance in the bank’s core banking system as required. The integration of SWIFT, a global cash transfer messaging service, with the bank’s CBS was non-functional in this case. Whenever the LoUs came up for renewal, fresh LoUs of higher amounts were issued to rotate the credit.

EXPOSURE OF BANKS

PNB Rs 12,600 cr

Allahabad Bank Rs 2,400 cr

UCO Bank Rs 2,635 cr

State Bank of India Rs 1,360 cr

Axis Bank Rs 200 cr

Union Bank Rs 1,920 cr


CRACKING THE WHIP
CBI files multiple cases: the latest is against Modi’s Firestar Diamonds for cheating PNB by availing credit facilities worth Rs 321 crore.

The Union Finance Minisry directs PSU banks to examine all bad loans of more than Rs 50 crore for possible fraud.

Bank heads told to proactively detect bank frauds, refer suspicious cases to CBI.

Serious Fraud Investigation Office (SFIO) asked to investigate around 110 companies, including some listed ones, and about 10 LLPs linked to Modi and Choksi.

Gem and Jewellery Export Promotion Council (GJEPC), the apex body of the sector’s exporters, has issued show-cause notices to Modi and Choksi. GJEPC says episode has hurt trade.

PNB appoints BDO, a Belgium-based audit firm, to conduct a forensic audit of five Nirav Modi companies — Firestar Diamond, Firestar International, Solar Export, Stellar Diamonds and Diamond R Us.

I-T department provisionally attaches 29 properties and 105 bank accounts of the diamond merchant, his family and firms. Also slapped fresh charges against anti-black money law.

CBI’s second FIR includes case against Choksi’s Gitanjali Group, whose retail locations were searched.

SFIO summons top officials of Axis and ICICI Bank.

PNB CEO Sunil Mehta too meets agency officials.

TOTAL SEIZURE TILL NOW
Rs 5,826cr

Includes: ED’s seizure of Rs 5,674 worth of diamonds, gold and jewellery from Nirav Modi’s home and offices

ED also seizes nine luxury cars belonging to Modi and his firms

ED freezes shares and MFs worth Rs 7.8cr held by Modi and Rs 86.72cr held by Choksi

WHO HAVE BEEN ARRESTED?
Around 20 persons, including 10 officials of Nirav & Choksi companies, auditors and branch officials

PNB GM Rajesh Jindal (headed branch in 2009-11) & retired deputy manager Gokulnath Shetty

PNB’s forex dept chief manager Bechu Tiwari (Shetty’s supervisor) and manager Yashwant Joshi

Former PNB auditor MK Sharma (responsible for audit)

Former PNB internal auditor Bishnubrata Mishra (responsible for audits, 2011-15)

Firestarter International Ltd’s then AGM(operation) Manish K Bosamiya & finance manager Miten Anil Pandya

Firestar International president Vipul Ambani

Kavita Mankikar, executive assistant and authorised signatory of three accused firms

Arjun Patil of Firestar Group

Kapil Khandelwal of Nakshatra Group and Gitanjali Group

Niten Shahi of Gitanjali Group

CA firm Sampat & Mehta partner Sanjay Rambhia

Gili India Ltd ex-director Aniyath Shiv Raman Nair

Hemant Bhatt Modi firms’ authorised signatory

NCLT has also restrained more than 60 entities, including Modi, Choksi, companies and limited liability partnership firms, from selling their assets

SEVERING TIES
Top executives Sanjay Rishi (American Express), Gautham Mukkavilli (former PepsiCo exec) & Suresh Senapaty (former Wipro CFO) resigned from Nirav co Quit Firestar International Board

Former Facebook India MD Kirthiga Reddy, who was on the US senior advisory board of Firestar, quits

ROAD AHEAD
RBI tells banks to put in place steps to beef up SWIFT oversight, orders linking of SWIFT with banks’ core accounting software by April 30.

RBI directs lenders to reconcile transactions real time in the nostro account — the account a bank holds in another bank overseas, usually in the currency of that country — so that disparities are traced immediately.