Mehul Choksi and Nirav Modi.
THE CENTRAL BUREAU of Investigation (CBI) on Monday quizzes two more senior officials from the Reserve Bank of India (RBI) in connection with the over Rs 13,500-crore fraud caused to the Punjab National Bank (PNB) by diamantaires Nirav Modi and his uncle Mehul Choksi. According to sources, the officials were questioned on the information pertaining to the reconciliation of the nostro account maintained by the PNB.
“During the probe, we found there was a mismatch in the nostro account maintained by PNB. The senior RBI officials were quizzed on the reconciliation of the said account and the procedures followed by the RBI to keep checks,” said a senior CBI official who spoke on the condition of anonymity. A nostro account is an account that a bank opens in a foreign country in currency of that country for trade and other transactions.
“The overseas branches of the Indian banks credited funds in the nostro account of the PNB on the Letter of Undertakings (LoUs) opened by the PNB. The funds were then routed to the beneficiary companies by PNB, which we suspect are front companies created for the purpose of laundering money. These beneficiary companies were shown as importers by the accused,” the official added. “While there were no transactions shown in the book, there was a liability created as the money was being credited in the nostro account which the bank failed to keep a tab on,” the official said.
“The officials have told us that the statement of the nostro account were sent to the dealer branch to authenticate if it’s theirs. They have cited various circulars and procedures followed by them. We are trying to understand where was the lapse, if any,” said the official.
Last week, the CBI had examined five senior officials including the former Deputy Governor of RBI, HR Khan on the 80:20 scheme pertaining to the jewellery import. Khan was particularly examined on the May 21, 2014 circular issued by the RBI on the said scheme.
“Both Choksi and Modi benefited out of the 80:20 scheme and raised money through LoUs. We are probing if the policy was misused by the duo to raise loans through fraudulent LoUs,” added the official.
While 80 per cent of gold imports under the scheme (India is one of the biggest importers of gold globally) could be sold in the country, at least 20 per cent of imports had to be exported before importers could bring in new consignments. The permission to import the next lot was to be given upon the fulfillment of the export obligation. The policy aimed to discourage gold imports to rein in the widening current account deficit.
Meanwhile, the Enforcement Directorate, which is probing the allegation of money laundering in the case, is expected to receive the report from the valuers engaged to ascertain the value of the assets seized by the agency within a fortnight. The agency has attached properties of over Rs 7,000 crore. Speaking at an earlier occasion, ED director Karnal Singh had said the value of seizure is based on the book value of the assets and they are getting an independent evaluation done of the same.