According to the recent developments in the $1.7 billion heist from the Mumbai branch of Punjab National Bank, the bank has alleged that Shetty colluded with Nirav Modi and his companies to make the fraud successful. The documents made public say that Nirav Modi and others used fake PNB guarantees worth $1.8 billion to obtains loans from overseas branches in order to import pearls.
Rajiv Kumar, a top official in the banking sector said that the heist started since 2011 and Shetty used to issue fake PNB guarantees without submitting any collateral. The fake letters of understanding were issued by Shetty between 2011 to 2017. The Punjab National Bank claimed that they used to bypass the internal messaging system in order to avoid being caught. Then they used the Swift Global Payment System to place instructions to overseas branches asking them to lend money, the report said. The bank is still investigating how they managed to pull off this heist for so long without getting caught.
The Press Trust of India said that the Government of India has asked every bank to send reports regarding this type of cases in recent past. However, Mr. Rajiv Kumar said that this was a lone case and other banks were not involved in this heist. More than ten PNB employees have been suspended and put under investigation by CBI. Punjab National Banks’s CEO told media that Mr. Nirav Modi has reached to the bank to present a repayment plan but they have put it on hold and are waiting for more details from the investigation. He apparently left the country even before FIR was filed against him.
After the heist came out, the foreign ministry has canceled the passports of Choski and Modi’s passports from immediate effect and said that if they do not respond within the specified period, the documents may be revoked. Any settlement will not be allowed which leave the burden on taxpayers of the country. The All India Bank Employees Association general secretary, C.H. Venkatachalam said that as more data is found, it seems that the amount is much bigger than expected.
The Chief Executive Officer of PNB, Mr. Sunil Mehta said that they were in talks with other banks and government and the liabilities will be decided only after the probe. Mr. Mehta told the reporters that they will follow the instructions regarding the repayment.
Meanwhile, RBI has not commented on the issue yet. According to the various documents investigated by Bloomberg, the heist money was being used either to replenish maturing lines of credit with some other banks or retire import bills. In the complaint, PNB has named Allahabad Bank and Hong Kong branches of Axis Bank Ltd. as the overseas parties who were scammed.
Financial Services Secretary Rajiv Kumar said on Thursday that the scam came to light only because of pressure from the government to clean up the banking system. He had update finance minister Arun Jaitley about the details of the heist involving Rs1.7 billion.
