Nirav Modi, a billionaire diamond jeweler, defrauded Punjab National Bank (PNB) of approximately 11,000 crore rupees (around $1.5 billion USD) through a complex scheme involving Letters of Undertaking (LoUs) and Foreign Letters of Credit. With the help of some PNB officials, Modi's company, Diamond R US, would approach PNB for a loan to import diamonds. PNB would then issue an LoU to other banks, including Axis Bank, which would provide the loan to Modi's company. However, Modi's company would not repay the loan, and PNB would be left to foot the bill. The scam, which began in 2011, went undetected for years until it was discovered in January 2018. Modi and several others, including his family members and business associates, have been accused in the scam, which is one of the largest banking frauds in Indian history.
Here are the key facts from the text:
1. A fraud of 11,000 crore rupees was committed at the Brad Hodge branch of the Punjab National Bank (PNB) in Mumbai.
2. The fraud involved the use of "credit" or "letter of credit" (LOC), a short-term loan from a bank to pay for imported goods.
3. The LOC was issued by PNB to Nirav Modi's company, Diamond R US, without proper collateral or security.
4. Nirav Modi's company used the LOC to obtain loans from other banks, including Axis Bank and Allahabad Bank.
5. The loans were not repaid, and PNB was left with a liability of 11,000 crore rupees.
6. The fraud was committed with the collusion of some PNB officials.
7. Nirav Modi's company had been using the LOC facility from PNB since 2011.
8. Nirav Modi is a diamond jeweler and was ranked as the 57th richest person in India in 2017.
9. Nirav Modi's maternal uncle, Mehul Choksi, is a partner in the Gitanjali Group, which was also involved in the fraud.
10. The Enforcement Directorate raided 17 locations, including Nirav Modi's house and office, and seized assets worth 5,100 crore rupees.
11. Nirav Modi and his family members have fled India.
12. PNB has filed a complaint with the CBI against Nirav Modi and his associates.
13. The government has given PNB 80 crore rupees to cover part of the loss.
14. The fraud is being investigated by the CBI and other agencies.