PNB scam: Fresh FIR filed against Mehul Choksi

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CBI filed new FIR against Gitanjali Group promoter Mehul Choksi for alleged fraud in the issuance of Letters of Understanding worth Rs 11,400 crore from Punjab National Bank, official said on Friday.

Central Bureau  of Investigation has alleged that the FIR pertains to 143 LOUs worth over Rs 4,886 cr fraudulently issued to 3 organisations of Choksi — Gitanjali Gems, Nakshatra and Gili — during 2017-18, they said.

The agency had earlier filed a separate case involving Rs 280-crore fraud, which has now been expanded to cover LoUs worth Rs 6,498 crore issued to accused companies of Nirav Modi and Choksi.

An LoU is a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers. After registering the FIR, the CBI carried out searches at 26 locations across six cities covering the premises of 18 Indian subsidiaries of Gitanjali Group.

Four officials of Punjab National Bank were also questioned, Bechu Tiwari, chief manager posted at Nariman Point branch, Mumbai during February 2015-17; DGM Sanjay Kumar Prasad who was then AGM at Brady house branch during period 2016-17; chief manager of zonal audit office Mohinder Kumar Sharma, who was then concurrent auditor during November 2015-January 17; and Manoj Kharat, then single window operator during November 2014-Decemeber 2017, the officials said.

They said a special team under a Deputy Inspector General (DIG) is being formed to probe the case.

In its complaint, the public sector bank has alleged that 293 Letters of Understanding (LoUs) worth Rs 11,400 cr were fraudulently issued to the companies of Nirav Modi and Mehul Choksi from one of the PNB’s branches in Mumbai.

Expanding the ambit of the first FIR registered on 31 January against the billionaire diamond merchant and Choksi, the agency has 150 LoUs worth Rs 6,498 crore issued by the bank.

The LoUs were issued by the Punjab National Bank to Indian banks in Mauritius, Bahrain, Hong Kong, Antwerp and Frankfurt for the accused companies, the officials said.

The remaining 143 LoUs worth Rs 4,886 crore will be part of probe under the new FIR registered on Friday.

The accused in the new FIR include Choksi (managing director, Gitanjali Gems), Gokulnath Shetty (retired DGM of Punjab National Bank), Manoj Kharat (then single window officer of Punjab National Bank), and companies - Gitanjali Gems Limited , Gili India Limited, Nakshatra Brand Limited, directors of the companies Krishnan Sangameshwaran, Nazura Yash Ajaney, Dinesh Gopaldas Bhatia, Aniyath Shivraman Nair and Dhanesh Vrajlal Sheth.

Also named in the FIR are Jyoti Bharat Vora, Anil Umesh Haldipur, Chandrakant Kanu Karkare, Pankhuri Abhijeet Warange, Mihir Bhaskar Joshi and unidentified bank officials.

The CBI has alleged in the FIR that accused bank officials Shetty and Kharat in connivance with accused companies and others defrauded Punjab National Bank to the tune of Rs 4,886.70 crore, the CBI spokesperson said.

The agency alleged that the accused officials issued fraudulent and unauthorised letters of undertakings in favour of foreign branches of different India-based banks.

The officials omitted entries of LoUs in the core banking system of the bank issued on behalf of the accused companies to avoid detection, they said.

(With agency inputs)

Mumbai PNB

PNBs fraud shocks business sectors

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The Country’s second-biggest public sector bank, Punjab National Bank (PNB) on Wednesday opened many eyes with the disclosure that it has detected some "fraudulent and unauthorised" transactions worth a staggering about Rs 11,300 crore in one branch of Mumbai.

It was noticed that the value of the fraudulent transactions works out to more than 8 times PNB's annual net profit of Rs 1,324 crore during 2016-17.

The bank said in a regulatory filing with the BSE that the transactions were "for the benefit of a few select account holders with their apparent connivance" and that “based on these transactions other banks appear to have advanced money to these customers abroad.”

PNB did not name the people involved but said it had reported the deals to law enforcement agencies and would evaluate later whether it faces any liability arising out of the transactions. 

The matter has been referred to law enforcement agencies to examine the case and book the culprits, the bank statement added. "These transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions," PNB said, without giving further details.

However, sources disclose that PNB has lodged a complaint with the CBI against billionaire jeweller Nirav Modi and a jewellery company over fraudulent transactions worth Rs 11,300 crore. The premier investigating agency is reported to have received the complaints about the transactions detected by the public sector bank late on Tuesday night. Modi is already being investigated by the CBI on a complaint from the Punjab National Bank filed last week over a $44 million (Rs 283 crore) fraud.

This is the second incident of fraud in less than 10 days involving the same person being reported to the CBI. Nirav Modi figured in Forbes India's Richest People List 2016, with a net worth of $1.74 billion. Jolted into action by the Rs 11,300 crore fraud at PNB, the finance ministry has set a oneweek deadline for all banks to send reports involving this case or other such incidents latest. Since more than one lender is involved, all banks have been asked by the finance ministry's department of financial services to submit a status report soon on the fraud, a senior official confirmed. He said the ``letter of undertaking'' was issued fraudulently by PNB to billionaire diamond merchant Nirav Modi and associates and was encashed overseas by them from different banks, both in the private as well as public sector. Union Bank of India, Allahabad Bank and Axis Bank are reported to have offered credit based on letters of undertaking (LOUs) issued by PNB.

An LOU is in effect a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers. Foreign branches of these banks which have dealings with outlets of a jewellery company are understood to have taken significant exposures. All this was being carried out in connivance with PNB officials including a deputy general manager since 2011, sources added.

PNB has suspended 10 employees in connection with the fraud. The finance ministry has also asked, through the reform agenda circulated to the banks on January 24, that dubious accounts should be scrutinised and appropriate action against fraudsters be taken with zero tolerance. Banks should not dither from taking action against their own employees in case of collusion if there is sufficient ground, the directions added.

(With agency inputs)


Market crashed; Investors lose Rs 4.95 L cr wealth

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A downfall for investors of Rs 4.95 L crore among sell-off in the broader market on Tuesday where the standard BSE Sensex suddenly fell 1,275 points or 3.6 percent in opening trade.

The BSE Sensex went deep below the 34,000-mark by plunging about 1,275 points or 3.6 percent in opening trade due to across-the-board losses after investor emotions were hit by a sell-off in world markets.

Following the downfall, the total market capitalisation of BSE listed companies eroded by Rs 4,94,766 crore to Rs 1,43,00,981 crore. Extending its falling streak for the sixth straight session, the 30-share index fell by 1,274.35 points, or 3.66 percent, to 33,482.81 with all sectoral indices led by realty, consumer durables, metal and banking tradings in the negative zone.

On BSE, 2,221 stocks declined, while 169 advanced and 83 remained unchanged. Domestic brokerage firm Angel Broking in a report on Tuesday said that a fall in Indian markets is likely amid sell off in global indices. "US stocks suffered one of their worst days in recent history in the last trading session, as markets continued to throw a tantrum over rising interest rates. The Dow Jones ended on downside of 4.6 percent to close at 24,346 and the Nasdaq Composite edged down to 3.8 percent, to 6,968," it said.

Moreover, UK shares tumbled as a strong US jobs report reinforced the Fed's outlook for three interest-rate hikes this year and investors looked ahead to a new round of talks between the UK and European Union. The FTSE 100 was down by 1.5 percent to close at 7,335, it added.

Arun 2

A shock post GST, before LS by-election

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The first post big reform, GST, and final before the 2019 Lok Sabha elections has given hearts to many for survival and left many in doom.

Matching many uplifted hopes and a mixed review from the budget, Finance Minister Arun Jaitley promised for the best healthcare insurance that has a new health related scheme which will provide health care insurance of up to Rs 5 lakh per year to every poor family.

The scheme aims at covering 10 crore families and 50 crore beneficiaries. The scheme would be applicable to all private hospitals as well. The budget also plan to set up 24 new government medical colleges and hospitals by upgrading existing district hospitals in the country.

Budget gave a relaxation to the salaried people since it dint touch the income tax slabs along with an announcement on reduction in women employees' contribution to EPF to 8 per cent for the 1st three years and extended the fixed-term employment facility to all sectors to give more jobs.

Government in it post GST and final before the parliament elections has stepped for ‘RISE’ (Revitalising of Infrastructure and Systems in Education) with a total investment of Rs 1 lakh crore in the next 4 years was mentioned. “We propose to increase the digital education and make a steady move from blackboard to digital board,” FM Arun Jaitley during his budget speech.

FM has also given a major relief to farmers, the government raised the minimum support price (MSP) to 1.5 times the cost of production for all upcoming Kharif crops. It also announced 100% tax deduction for farm producer firms with Rs 100 crore turnovers. Kisan credit card will be extended to fisheries and animal husbandry farmers. The government will spend Rs 14.34 lakh crore in rural areas in terms of providing jobs and infra.

The budget 2018 has also talked about providing housing facility by 2022, the budget has proposed to set up an affordable housing fund under the National Housing Bank (NHB). The government has set a target to construct a minimum of 2 crore toilets under Swachh Bharat Mission and 51 lakh affordable housing units in rural and 50 lakh in urban areas.

Finance Minister announced WI-Fi access in trains and in the railway stations also all the railways stations with more than 25,000 footfall will have escalators. This is the second union budget since the Centre merged the Railway budget with the general budget last year. The government announced a capital expenditure of Rs 1.48 lakh crore for the Indian Railways

The government in the budget has allocated Rs 3 lakh crore for lending under Micro-Units Development & Refinance Agency Ltd (MUDRA), around 20 per cent hike from the last year.

With turnover of up to Rs 250 crore to 25% from current 30%, budget lowered the corporate tax for small, micro and medium enterprises.

Government dint want to miss on fiscal consolidation roadmap, which could have been the trouble from the oppositions to stand against the government after the budget presentation. The fiscal deficit for current fiscal will widen to 3.5% of the GDP as against 3.2% previously targeted, and to 3.3% in FY'19 as opposed to 3 per cent previously targeted.