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  #1  
Old February 14th, 2018, 09:26 PM
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Post Punjab national bank fraud

Punjab National Bank fraud: How money vanished from one account


Nirav Modi defrauded Punjab National Bank


This huge fraud comes on top of other banking frauds committed . Already government banks are in losses due to bad loans given earlier . The government has started injecting considerable money in those banks to help them stay afloat . But now this massive fraud that has been uncovered further complicates the situation.

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NEW DELHI: In one of the biggest fraud cases to hit Indian banking, the country's second largest lender Punjab National Bank (PNB) informed stock exchanges on Wednesday that it has been hit by embezzlement amounting to Rs 11,300 crore at one of its branches in Mumbai.
Here is how the fraud took place:

WHEN AND WHERE DID THE FRAUD START?
In 2011, when a letter of undertaking (LoU) was opened at the Fountain branch of PNB in Mumbai by the alleged fraudster.
Read also: Billionaire jeweller under lens as PNB jolted by Rs 11,300 crore fraud

WHAT'S AN LoU?
A bank guarantee. The bank opening an LoU for a client agrees to unconditionally repay the principal and interest on client’s loan. The client could be an importer who uses funds or credit limit with an Indian bank to get cheaper foreign currency loans.

HOW WAS THE LoU MISUSED?
A PNB deputy manager, Gokulnath Shetty, allegedly used his access to the SWIFT messaging system used by banks for overseas transactions to authenticate guarantees given on LoUs without any sanctions. Based on such authentications, overseas branches of several Indian banks gave forex credit.
Read also: Nirav Modi under ED lens in CBI's Rs 280cr fraud case

ARE OTHER BANKS AFFECTED?
Several Indian banks with overseas branches will be impacted as they have provided loans based on these LoUs. PNB is denying liability, claiming that these are fraudulent LoU.

WHAT ACTIONS HAS PNB TAKEN?
It has suspended 10 employees, and referred the case to CBI and ED.

HOW AND WHEN DID IT COME TO LIGHT?
In January, when the earlier LoUs matured and foreign branches did not get their money. They then turned to PNB, which said that the guarantees were fraudulent.

THE FRAUD...IN NUMBERS

1) The fraud is 8 times the bank’s 2016-17 profit of Rs 1,325 crore
2) It is equal to a third of PNB’s market cap of Rs 35,300 crore

3) PNB share price fell 10 per cent on Wednesday. It cracked a further 8 per cent in Thursday's morning trade
4) Government was expected to infuse Rs 5,473 crore in PNB equity
In Video: PNB fraud: Nirav Modi illegally obtains 'letter of undertaking'


https://m.timesofindia.com/business/...w/62925831.cms
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Last edited by ashdoc; February 15th, 2018 at 06:15 AM.
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  #2  
Old February 15th, 2018, 12:24 AM
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Re: Punjab national bank fraud

Quote:
Originally Posted by ashdoc View Post
https://m.timesofindia.com/business/...w/62925831.cms

This huge fraud comes on top of other banking frauds committed . Already government banks are in losses due to bad loans given earlier . The government has started injecting considerable money in those banks to help them stay afloat . But now this massive fraud that has been uncovered further complicates the situation.
Can you give a brief on what the fraud is?

All newspaper sites just talk of the fraud but what exactly happened?
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  #3  
Old February 15th, 2018, 02:11 AM
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Re: Punjab national bank fraud

Here it is explained

MUMBAI: How did two employees try to fool a stodgy bank in the largest diamond house fraud that surfaced on Valentine’s Day, when thousands of pearls and gems change hands across the world?

In raising funds and moving money out of Punjab National Bank (PNB), the two employees of the state-owned lender directly used SWIFT — the global financial messaging service used to move millions of dollars across borders every hour — and bypassed the core banking system (CBS) which processes daily banking transactions and posts updates.
It was a ploy to avoid immediate detection: the SWIFT messages used to raise overseas credit were not readily available in PNB’s FINACLE software system as these were issued without entering into the bank’s CBS.

WHAT REALLY HAPPENED?
It began with diamond firms approaching PNB for opening letters of credit for import of rough stones. As per the terms of the LC, a common banking tool, PNB would pay the overseas suppliers on behalf on Nirav Modi’s firms within a certain period (typically three months) and recover the money from Modi. It’s a market practice to extend the LC if the client (i.e, NM) is unable to cough up the money at the end of the LC tenure.

Fake LoUs were issued

This is done on the basis of letters of undertaking given by the local bank (which in this case is PNB).
PNB employees issued fake LoUs, on the back of which foreign branches of a few Indian banks — including Axis and Allahabad Bank — gave dollar loans to PNB. These foreign currency loans were used to fund PNB’s Nostro accounts and from these accounts funds moved to certain overseas parties. A Nostro account is the account an Indian bank (here, PNB) has with an overseas bank.

Based on unauthorised Lo-Us, the PNB employees misused the SWIFT network to transmit messages to Allahabad Bank and Axis Bank on fund requirement. In using SWIFT, one has to log into the network to fill up fields like the account number and SWIFT code, following which it is endorsed by a supervisor. The process is completed when the bank receiving the message confirms and the details are validated. While all this was done using SWIFT passwords, the transactions were never recorded in the bank’s core system — thus keeping the PNB management in the dark for a long time.
The other question that crops up is: who were the suppliers? In the closely-knit world of diamonds, the overseas suppliers of rough stones and the final exporters of diamonds (after these are cut and polished in Surat) are often members of the clan, if not same family. According to PNB’s statement to enforcement agencies, the funds so raised for payment of import bills have not been utilised for such purposes in many cases.

According to banking circles, PNB will have to make good the lost money even though technically Allahabad Bank and Axis Bank took the exposure. “It is not known whether Axis and Allahabad still have the loans on their books or they have offloaded some of it to other banks,” said another banker.
According to a confidential note from PNB to some banks, similar modus operandi was used by the same officials in companies belonging to Mehul Choksi-promoted Gitanjali Gems, Gili India and Nakshatra, while issuing Lo-Us/ LCs. The transactions were initially routed through the CBS system but subsequently changes were made in the LCs by substantially increasing the amount and transmitted through SWIFT without reporting this to CBS.

According to the note, LoUs were opened for pearl import for which total time period allowed by RBI is 90 days. Some of the overseas branches of Indian banks overlooked the rule. PNB has alleged “clear criminal connivance” of group companies of Modi and Gitanjali with some officials of PNB and other banks. In what could lead to a feud between PNB and other Indian banks, the former has complained that some of the branches of other Indian banks have not shared key documents related to the credit with PNB.
It appears the overseas buyers’ credit against LoUs was used to retire import bills or replenish maturing credit.
Allahabad Bank has also issued a confidential note to other banks on the modus operandi of the fraud.


HOW THE FRAUD WILL HURT BUSINESS?

Banks will clampdown on credit limits and insurance companies will turn cautious. On Wednesday, a large American insurance company alerted all its offices not to take any exposure to two companies linked to Nirav Modi and his associates, sources told ET.
It is unclear whether the insurer in question would wriggle out of its existing commitments (if any) on the grounds that there has been a fraud .

Meanwhile, in Mumbai's diamond and bullion districts everyone is guessing how long would Modi and his uncle Mehul Choksi take to return to India .

https://www.google.co.in/amp/s/m.eco...w/62922878.cms
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Last edited by ashdoc; February 15th, 2018 at 02:25 AM.
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  #4  
Old February 15th, 2018, 03:42 AM
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Re: Punjab national bank fraud

Thanks for the explanation.
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Old February 15th, 2018, 04:07 AM
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Re: Punjab national bank fraud

Global star Priyanka Chopra, who starred in a romantic advertisement for a luxury jewellery brand alongside Bollywood's heartthrob Sidharth Malhotra, has reportedly dragged the owner of the brand, Nirav Modi to court over non-payment of dues.

Priyanka's legal team has reportedly charged him with defrauding the actress and not paying her, her dues for an endorsement deal also featuring Sidharth Malhotra.

LINK
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  #6  
Old February 15th, 2018, 06:42 AM
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Re: Punjab national bank fraud

This is classic example of looting money with everyone taking their piece of the pie.. politicians, bankers, businessman.
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Old February 15th, 2018, 08:39 AM
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Re: Punjab national bank fraud

Couldnt have been done without bank or some employees of the bank being complicit...
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Old February 15th, 2018, 10:33 AM
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Re: Punjab national bank fraud

Quote:
Originally Posted by kkkk View Post
Couldnt have been done without bank or some employees of the bank being complicit...
con party relation with the looter
  #9  
Old February 15th, 2018, 01:06 PM
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Re: Punjab national bank fraud

Here people kill each other for a few thousand rupees and this guy dwindles 11k crores! Does this guy Nirav have any conscience?
Where is he currently BTW?
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Old February 15th, 2018, 01:45 PM
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Re: Punjab national bank fraud

50% loot recovered?

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Old February 15th, 2018, 07:51 PM
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Re: Punjab national bank fraud

Quote:
Originally Posted by Charchila View Post
50% loot recovered?

I am not sure how the ED estimated the real value of those jewels and diamonds.
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Old February 15th, 2018, 08:04 PM
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Re: Punjab national bank fraud

Quote:
Originally Posted by BABU_HYDERABADI View Post
I am not sure how the ED estimated the real value of those jewels and diamonds.
You have ED, FBI and finance ministry.. yet no action at all until things come to fore by themselves. Why is there no tracking of 100 biggest loans, and week by week monitoring? Doesn't it tell you that whole system is complicit?

Finally who got robbed, it's you and me .. or people like us who save each penny and put in bank to get interest.

If demonetization was about getting money in the banks, and prior to that Jan Dhan was about bringing millions into the banking system.. such scams only reinforce the fears people have had for decades. That banks are not secure, open to government scrutiny and worse, plunder by whole system.


Last edited by sarv_shaktimaan; February 15th, 2018 at 08:09 PM.
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Old February 15th, 2018, 08:10 PM
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Re: Punjab national bank fraud

Quote:
Originally Posted by Charchila View Post
50% loot recovered?

Only attached as of now, not actually recovered. I won't be surprised if even after this nothing comes to PNB.
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Old February 15th, 2018, 08:34 PM
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Re: Punjab national bank fraud

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Old February 16th, 2018, 03:22 AM
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Re: Punjab national bank fraud

it seems bada modi narendra has allowed chhota modi nirav to run away from india before he could get caught . gujjubhai helping gujjubhai .
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Last edited by ashdoc; February 16th, 2018 at 03:35 AM.
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