Watch: ‘Indian Diamond Market Is Full of Nirav Modis,’ Says Trader

Banking fraud, under-the-table commissions, inflated LoUs and black money – how diamond traders tap into the market.

Updated
India
2 min read

Video Editor: Purnendu Pritam
Camera: Abhay Sharma
Actor: Jaivardhan Channey

“You can get a Letter of Undertaking from a bank under three circumstances – either you know someone in the BJP, or you know someone in the Congress, or you know someone higher-up in the bank,” says Jaspreet Singh (name changed) a Delhi-based jeweller who’s been running his family business for the last 35 years.

Between Nirav Modi and his mentor-uncle Mehul Choksi, they probably knew someone in all three places, which helped them get LoUs worth over Rs 12,600 crore without fulfilling any necessary banking requirements. The bottom line, however, is that over Rs 12,600 crore of taxpayers’ money being risked.

While this was the first-of-its-kind fraud, admitted to and exposed by the Punjab National Bank itself, it came as no shock to those in the diamond trade.

“Everything runs on goodwill and cash,” says the 57 year-old Singh, who deals primarily in diamond jewellery. “What Nirav Modi did is not an unusual practice in the diamond market. But there are very few Nirav Modis who get LoUs at the drop of a hat.”

Tu Janta Nahi Main Kaun Hoon?

An aam aadmi will have to jump through hoops to get a Letter of Undertaking from a bank.

When I approached a bank to get an LoU, I was asked to give details of my company’s financial transactions over three years, property papers, details of foreign-based diamond company etc. And then I had to wait for another month.
Jaspreet Singh, Diamond Trader

Compare this with the generosity bestowed upon Nirav Modi and Mehul Choksi. 293 LoUs, worth over Rs 12,600 crore, were issued to the two by Punjab National Bank in 2017-2018 alone! That’s not all. These LoUs were issued way beyond the sanctioned credit limit and without margin (security) money being deposited with the bank.

That Nirav Modi is well-connected in the political and corporate circles is not new information. “It would’ve been a cakewalk for him,” says Jaspreet Singh.

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