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ED seizes ₹5,100 crore of Nirav Modi assets

Our Bureau | Updated on April 14, 2018

Security guards stand inside a Nirav Modi showroom in New Delhi, during a search by the Enforcement Directorate on Thursday REUTERS

Searches on premises across India; PNB seeks ‘concrete repayment plan’ from the accused



On a day when properties associated with billionaire diamentaire Nirav Modi were searched and assets attached, Punjab National Bank (PNB) demanded a concrete repayment plan from the prime accused in the ₹11,300-crore ‘Letter of Undertaking’ scam.

The Enforcement Directorate swung into action on Thursday, conducting searches at several premises of Nirav Modi and Gitanjali Gems across the country, and seized assets worth ₹5,100 crore.

ED sources said the searches were conducted at four locations in Mumbai, three in New Delhi, and two in Surat. “Investigations are under way to check if some round-tripping of funds was attempted and if some of this money found its way to the stock market,” the source said.

A few stock brokers have also been questioned to ascertain if Mehul Choksi, the owner of Gitanjali Gems, had defaulted on payments to stock brokers, the source added.

Premises of senior bank executives were also searched, according to ED sources.

Meanwhile, the Central Bureau of Investigation (CBI) questioned PNB officials, but has made no arrests yet. Earlier, the CBI sealed the residence of Ami Modi, wife of Nirav Modi, in Mumbai’s Worli, after conducting a raid on February 3 and 4. The probe agency also seized 95 documents, including import bills and applications.

PNB seeks repayment plan

PNB Managing Director & CEO Sunil Mehta said Nirav Modi had not given the bank any “concrete repayment plan”, only some “vague offers”. He declined to give details of the offers.

“He (Nirav Modi) had, last week, sent us an email offering to repay the dues. We asked him to come in person to give (us) a written plan...we have not accepted the vague offers. We have asked for a concrete repayment plan,” Mehta told reporters here.

The scam has, meanwhile, taken a political turn, with the Opposition attacking the government and dubbing the billionaire jewellery designer ‘Chotta Modi’. Countering this, Union IT and Law & Justice Minister Ravi Shankar Prasad slammed the Congress for playing politics.

“The Congress is trying to degrade PM Modi just because Nirav holds the Modi surname. This is shameful. Congress using words like ‘Chotta Modi’ is not acceptable. BJP takes strong offence to the language used. It is derogatory,” he said. “The government will not spare anyone who has sought to derail the banking system to help Nirav Modi. This is regardless of (the) stature and status of (the) official. Nirav Modi was not part of PM’s delegation at the World Economic Forum in Davos. He was part of the CII delegation. There was no meeting between Nirav Modi and the PM in Davos,” Prasad said.

Following searches at properties associated with Nirav Modi on Thursday, assets worth ₹1,300 crore have been seized, passports have been revoked, and a look-out notice issued for the diamantaire.

Meanwhile, Mehta said the scam had its origins in 2011, and came to light in the third week of January 2018 when the customer visited the bank to renew the Letter of Undertaking (LoU).

The fraudulent LoU was never entered into the PNB’s system. “We approached the CBI on January 29 and filed an FIR on January 30,” Mehta said.

The PNB chief also confirmed that most of the lenders who accepted the LoUs were overseas branches of Indian banks, and there was only one pure-play foreign lender. Asserting that PNB will honour its commitments, Mehta said the bank would protect the financial interest of all lenders.

“PNB is in discussions with other stakeholder banks,” he said, but declined to confirm if the ED had raided the PNB branch where the fraud is reported to have taken place.

Asked if the bank had any fund-based credit exposure to Nirav Modi-led firms or those of his uncle Mehul Choksi, Mehta said the total credit exposure stood at ₹1,700 crore.


Mehta said that PNB’s exact liability would be known only after the investigations were completed. “We are in discussion with the lenders. If the entire onus is on us, we will take responsibility,” he said.

PNB also contended that the banks that had advanced monies to the Nirav Modi firms did not adhere to international practices in confirming the LoU, and would need to bear some responsibility. “Whatever is our responsibility and whatever the regulator (RBI) says, we will follow,” he said.


Published on February 15, 2018

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