PNB CEO Sunil Mehta Appears Before SFIO in Nirav Modi Fraud Case

Investigators have summoned officials of India’s biggest banks as they probe the multi-crore Nirav Modi-PNB fraud.

Sunil Mehta, Chairman and Managing Director of Punjab National Bank.

(Photo: ANI)

Punjab National Bank Managing Director and CEO Sunil Mehta, on 7 March, appeared before the Serious Fraud Investigation Office (SFIO) in New Delhi after being summoned to record his statement in connection with the Rs 12,636 crore fraud at the bank.

The SFIO is also expected to call officials of nearly 31 banks that have been exposed to the companies of Nirav Modi and Mehul Choksi. The Enforcement Directorate has written to the heads of 31 banks asking to meet officials about the fraud, according to people familiar with the matter.

It is alleged that Modi and Choksi got LoUs and FLCs of Rs 12,636 crore issued in favour of foreign branches of Indian banks based on fraudulent claims. The transactions were carried out from PNB's Brady House branch in Mumbai.

On 6 March, the SFIP summoned Chanda Kochhar, chief executive officer at ICICI Bank Ltd, and Shikha Sharma, Axis Bank Limited MD for a meeting, CNBC TV18 reported.

Federal investigators sought to question the chiefs of India’s biggest lenders as they widen their probe into the $2 billion fraud at Punjab National Bank.

Just being summoned by the authorities doesn’t suggest that all these banks have colluded in the alleged fraud. Authorities are seeking clarity and are leaving no stone unturned in building up a case without any loopholes.

Pooja Dutta, Managing Partner, Mumbai-based law firm Astute Law

Shares of ICICI Bank tumbled 2.7 percent to a four-month low in Mumbai on Tuesday, 6 March. PNB dropped 2.3 percent and Axis Bank fell 1.4 percent, pushing the 10-member S&P Bankex Index to its fifth day of declines. The stock exchange has sought clarification and is awaiting a reply from ICICI Bank and Axis Bank, it said on its website.

The fraud was disclosed about a month ago, when PNB alleged that the jewellers colluded with some PNB officials to get fake Letters of Undertaking, which they used to obtain loans from overseas branches of Indian banks. Investigators claim the scam had been running since 2011 and involves multiple regulatory infractions, leaving a web of lenders embroiled in questions about the quality of their compliance.

(With inputs from BloombergQuint, PTI.)