India Issues Warrants For Punjab Bank Heist Jewelers

Non-bailable warrants have been issued for the two central figures in an alleged $2 billion scam at state-run Punjab National Bank (PNB).

According to Reuters, a special court of India’s Central Bureau of Investigation (CBI) approved an application to issue non-bailable warrants against jewelers Nirav Modi and Mehul Choksi.

In February, PNB announced that it had discovered $1.8 billion in fraudulent activity at one of its branches, making it the biggest banking scandal in the country’s history. Once the investigation is completed, though, the bank’s exposure could reach $2 billion.

The scandal, which is the biggest in India’s history, involves firms associated with Modi and Choksi. The allegations, which go as far back as 2010, involve the firms receiving fraudulent letters of undertaking (LoUs) from the Brady House branch, which allowed them to then borrow money from overseas banks.

The bank also alleged that Modi took advantage of the inexperience of junior banking personnel to receive the letters.

Modi and Choksi have denied the allegations against them, and authorities say they both left the country before the fraud was uncovered. PNB has said it is working with the investigators and regulators probing the fraud case.

So far, 20 people have been arrested, including a PNB senior official, two officers in charge of the foreign exchange department and one officer in charge of checking the SWIFT communications.

And last week, it was reported that law enforcement agents were also interrogating three chief general managers at the Reserve Bank of India (RBI) and a general manager over the fraud at PNB.

In addition, CBI is questioning officers of overseas branches of Indian banks that extended credit facilities on the basis of the fraudulent LoUs.  The agency has also summoned an officer dealing with foreign exchange at Allahabad Bank’s Hong Kong branch for questioning. Allahabad Bank has denied any wrongdoing.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.