Nirav Modi misrepresentation case: No clearness yet for PNB, different banks


Its now one day to Nirav Modi’s Rs 11,400 crore Fraud, the degree of misfortunes for Punjab National Bank and other banks remained a confound. Unmistakably, $1.77 billion is the sum that Modi and his organizations acquired since 2011. What’s misty, however, is the extraordinary introduction and its amount was really reimbursed.

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Punjab National Bank | Reuters File Photo

In the event that you read between the lines, the FIR the CBI recorded a month ago raises concerns if the whole Rs 11,400 crore or part of it was stolen in little tranches consistently. PNB, in an announcement to CBI a month ago had completely said “open assets to the tune of Rs 281 crore appears to have been stolen by conferring fraud…” fortifying feelings of trepidation that the suspended PNB authorities may have occupied assets.

Numerous inquiries rise. Boss among them is the extraordinary presentation. As per PNB, the getting firms to be specific Diamonds R US, Solar Exports and Stellar Diamond brought capital up in outside cash (from remote branches of Indian banks) in light of unapproved Letter of Understanding (LOU) that PNB workers falsely issued. For example, in 2017 alone, eight phony LOUs were utilized to raise Rs 281 crore from the Hong Kong branches of Allahabad Bank and Axis Bank.

There are numerous unanswered inquiries in the PNB trick including Letters of Understanding (LOUs). By nature, LOUs are here and now instruments, and if the borrower neglects to reimburse, it turns into a default raising warnings.

Here, two things may have happened.

One, the borrower may have reimbursed, and that is the means by which the misrepresentation stayed undetected. Provided that this is true, the quantum of bank misfortunes could be insignificant. In any case, if bank authorities redirected stores, the misfortunes could be grave.

Two, for what reason did PNB issue LOUs with due date surpassing 330 days, against the traditional 90-day standard? The eight phony LOUs in February 2017 had due dates of January 2018.

Three, if the organizations being referred to in total acquired Rs 11,400 crore, why is Nirav Modi ‘dubiously’ offering Rs 6,000 crore in settlement? Now that is something the Enforcement Directorate, Sebi, RBI and CBI are endeavoring to split together. Sunil Mehta, MD and CEO of PNB on Thursday cleared up the bank would respect every one of its liabilities, however didn’t uncover the hit it might need to take.

“The sum included is substantial…At this crossroads, researching offices have been restricted in and it will require investment to learn the money related effect on managing an account framework,” said Kunal Shah of Edelweiss Securities.


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