Major jewellers Gitanjali, Ginni and Nakshatra have also come under the scanner of various investigating agencies following Punjab National Bank's declaration of Rs. 11,400 crore fraud, committed allegedly by Nirav Modi.
Punjab National Bank (PNB) disclosed this morning that it has detected some fraudulent transactions with financial implication of USD 1.77 billion (about Rs. 11,346 crore) and the matter has been referred to law enforcement agencies for the recovery.
"Four big jewellers -- Gitanjali, Ginni, Nakshatra and Nirav Modi -- are under scanner. The CBI and Enforcement Directorate is looking at their arrangements with various banks and end use of money," a senior official of a public sector bank told.
No immediate comments were available from these companies.
There is strict instruction from the finance ministry to all banks that no big fish should go scot free and no honest borrower is harassed, the official said.
Banks are now looking at their systems and processes so that such frauds are not repeated, the official said.
All banks have been asked to present a status report as soon as possible, he added.
In 2015, Bank of Baroda, another public sector bank, had brought to light a scam in which two Delhi businessmen cheated it of Rs. 6,000 crore which slightly less than USD 1 billion at that time.
Investigations revealed major irregularities, because the forex transactions were done mainly via advance remittances for import, through newly-opened current accounts. Heavy cash transactions, sometimes four or five times a day were also noticed.
The Enforcement Directorate, under the revenue department of the finance ministry, had arrested the businessman duo under money laundering provisions.
PNB said in a statement that fraudulent transactions took place in one of its branches in Mumbai for the benefit of a few select account holders with their apparent connivance.
Based on these transactions, done by his brother Nishal, wife Ami and Mehul Chinubhai Choksi, other banks appear to have advanced money to these customers abroad.
All this was being carried out in connivance with officials as high as Deputy General Manager since 2011.
The CBI has received two complaints from the PNB against billionaire diamantaire Nirav Modi and a jewellery company alleging fraudulent transactions.
Mr Modi, whose jewellery creations are popular among global celebrities, may face a fresh CBI probe as the agency is looking at suitable legal action to be taken in the case.
He is already being investigated by the CBI for alleged cheating and fraud involving Rs. 280 crore at a PNB branch.
PUNJAB NATIONAL BANK SAYS $1.8 BILLION FRAUD, A NIRAV MODI LINK: 10 FACTS
Punjab National bank, India's second-largest government bank, reported today that $1.8 billion or over Rs. 11,000 crore of taxpayers' money had been illegally transferred abroad to select customers from a single branch in Mumbai.
The revelation will affect the banking industry with the Finance Ministry asking all banks to investigate their books for similar cases and report to it by the end of the week. Not long after the news surfaced this morning, sources in the CBI were quoted by the Press Trust of India as saying that the agency had received two complaints against celebrity jeweller Nirav Modi, alleging fraud worth Rs. 10,000 crore.
Punjab National Bank said in a regulatory filing to the stock exchange that it had detected "fraudulent and unauthorised" transactions amounting to around Rs. 11,360 crore at a branch in Mumbai. The illegal transactions benefited "a few select account holders with their apparent connivance" and based on these, "other banks appear to have advanced money to these customers abroad".
The CBI received the bank's complaints against Nirav Modi late last night, sources told the Press Trust of India.
Major jewellers Gitanjali, Ginni, and Nakshatra have also come under the scanner of various investigating agencies, said, quoting an unnamed bank official.
Nirav Modi, 48, is already being investigated by the CBI in connection with fraud worth Rs. 280 crore. The diamond merchant was raided by income tax officials on January 31; his offices in Delhi, Surat and Jaipur were searched.
CBI sources say Nirav Modi, his wife, brother and others worked with bank officials to illegally obtain Letters of Undertaking, which were cashed overseas from different banks, both private and public sector.
The CBI was told that eight Letters of Understanding were issued to the billionaire jeweller, without being entered in the books, directly for Hong Kong-based banks.
The alleged fraud was facilitated by senior bank officials since 2011, CBI sources said. The bank has suspended 10 employees but has not revealed names.
The alleged swindle was revealed when Nirav Modi's companies sought a fresh loan last month, the bank said. The officials who had helped them earlier had retired. When the bank insisted on guarantees to issue Letters of Understanding, the Modi companies allegedly said they had used the facility before. That's when the bank started investigating.
Nirav Modi is the founder of $2.3 billion Firestar Diamond and counts among his clients and brand ambassadors several world renowned celebrities. He has boutiques across three continents - in London, New York, Las Vegas, Hawai, Singapore, Beijing and Macau. In India, Mr Modi has his stores in Mumbai and Delhi.
Last year, the state-owned Bank of Baroda was cheated of Rs. 6,000 crore, or almost a billion dollars, by two businessmen.
