India federal police arrest three people in PNB fraud case

Punjab National Bank informed the stock exchanges on Wednesday that the fraud was detected in one of its branches in Mumbai and that it has referred the matter to law enforcement agencies

The CBI has arrested three people - former Deputy Manager of the bank, Gokulnath Shetty, Single Window Operator of the bank, Manoj Kharat, and the authorised signatory of Nirav Modi group of firms, Hemant Bhat.

Special CBI Court today sent all three accused arrested in PNB fraud case to police custody till March 3.

As per CBI FIR all these bank officials are now suspects and they are being investigated.

"These attachments have been made keeping in view the huge demand which is likely to be raised in the assessment proceedings which are underway in the case of Nirav Modi, his family members and group concerns", an I-T report, accessed by PTI, said.

According to the FIR, it was alleged in the PNB complaint that Gitanjali Gems, Gili India Ltd and Nakshatra Brand Ltd and their directors in connivance with Sethi and other officials had caused an alleged loss of Rs 4,886.72 crore to the bank.

The Indian government has suspended Nirav Modi's passport, but it has now emerged that the man at at the centre of the Rs 11,400 crore Punjab National Bank (PNB) scam may be holding dual citizenship.

The ED on Thursday registered an FIR under the Prevention of Money Laundering Act and conducted raids after surfacing of the alleged fraud by billionaire diamond trader Nirav Modi and his Mumbai-based firms - Diamonds R Us, Solar Exports, and Stellar Diamonds. The first information report filed by the Central Bureau of Investigation, however, says that most of the loans were issued or renewed in 2017-'18.

Although the case has once again drawn the attention to large frauds in banking system, the RBI has been cautioning about it for some time.

The scale of the fraud has sparked a slew of probes into the lender, as well as into Modi, his uncle Choksi and companies affiliated to both. The LoUs, issued when overseas import payments are involved, basically guarantee liability payment by one bank to another on behalf of its client.

Apart from Mehul Choksi, the party said, Nirav Modi also accompanied Prime Minister Modi during his Davos visit to attend the World Economic Forum last month.

The scam could reportedly be exposed because an employee of Nirav Modi told the Hong Kong branch of an Indian bank that the reason why a particular LoU was delayed was that an official of PNB's Mumbai office in Brady House had asked for a bribe to issue the guarantee.

His letter to the PMO clearly stated the fact that Mehul Choksi had taken massive bank loans worth nearly Rs 9872 crore but his assets are way below than the amount.

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