Nirav Modi Fraud Case: Rs 3,000 Cr ‘Lent’ By 17 Banks to His Firms

As many as 150 Letters of Undertaking were reportedly issued to firms linked to Nirav Modi and his relatives.

As the CBI and the Enforcement Directorate continue with their crackdown against Nirav Modi, it has now emerged that an additional Rs 3,000 crore was lent by 17 banks to the many companies belonging to the diamond jewellery business magnate.

This is after reports surfaced about a Rs 11,292 crore fraud at the Punjab National Bank (PNB) involving Nirav Modi.

According to an Indian Express report, apart from PNB, the other banks involved in the Rs 3,000 crore lending are the Central Bank of India (Rs 194 crore), Dena Bank (Rs 153.25 crore), Vijaya Bank (Rs 150.15 crore), Bank of India (Rs 127 crore), Syndicate Bank (Rs 125 crore), Oriental Bank of Commerce (Rs 120 crore), Union Bank of India (Rs 110 crore), IDBI Bank (Rs 100 crore) and Allahabad Bank (Rs 100 crore).

Moreover, the flagship company of Nirav Modi, Firestar International, received Rs 1,980 crore from these banks, as of June 2015.

The investigating agencies, the CBI and the ED, also suspect money laundering in the over Rs 11,000 crore fraud, The Indian Express reported.

Citing sources, the report further said that as many as 150 Letters of Undertaking (LoUs) were issued to firms linked to Modi and his relatives. Moreover, many of the LoUs were reportedly not fresh, but renewed.

Explaining the modus operandi adopted by Nirav Modi and his companies, an official told The Indian Express:

What Modi’s companies did was to approach PNB close to the expiry of the LoUs and get them renewed with interest amount added. This gave them three more months to pay. They kept doing this to carry forward the money and not pay PNB. This kind of renewal is just not allowed and amounts to money laundering. How it escaped scrutiny for so many years is what we are now investigating.

Official to The Indian Express

The surfacing of the fraud has also put the RBI's audit process under the scanner, investigators and sources reportedly said.

Moreover, according to ED sources, the Income Tax department had also found an alleged tax evasion amounting to Rs 500 crore after searching Modi's offices last year. In this regard, an ED official was quoted by The Indian Express as saying, "We have sought documents seized by the IT department and details of their investigations."

Meanwhile, the ED has seized assets worth Rs 5,500 crores from the searches conducted at 17 properties of Nirav Modi across India. The ED sleuths also sealed six properties owned by the fugitive jewellery designer. The CBI and the ED moved separate applications with the external affairs ministry, seeking the revocation of passports of Modi and his maternal uncle Mehul Choksi.

A lookout notice was issued by the CBI against Modi, his wife, his brother and Choksi on 4 February.

According to reports, Modi had left India on 1 January along with his brother.