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    Punjab National Bank Scam

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    Anuj Singh
    This document presents information about the $1.77 billion fraud at Punjab National Bank involving jeweller Nirav Modi. It summarizes that a former PNB employee issued fake bank guarantees without collateral to help Modi secure loans from other Indian banks between 2011-2017. When PNB declined a new loan request in early 2018, the fraud came to light. Authorities have suspended PNB employees and are taking steps to recover assets from those involved in the scam. The document also provides background on PNB, details on how the fraud occurred, and questions raised about the case.

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    © All Rights Reserved
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    Punjab National Bank Scam

    Uploaded by

    Anuj Singh
    205 views17 pages
    This document presents information about the $1.77 billion fraud at Punjab National Bank involving jeweller Nirav Modi. It summarizes that a former PNB employee issued fake bank guarantees without collateral to help Modi secure loans from other Indian banks between 2011-2017. When PNB declined a new loan request in early 2018, the fraud came to light. Authorities have suspended PNB employees and are taking steps to recover assets from those involved in the scam. The document also provides background on PNB, details on how the fraud occurred, and questions raised about the case.

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    This document presents information about the $1.77 billion fraud at Punjab National Bank involving jeweller Nirav Modi. It summarizes that a former PNB employee issued fake bank guarantees without collateral to help Modi secure loans from other Indian banks between 2011-2017. When PNB declined a new loan request in early 2018, the fraud came to light. Authorities have suspended PNB employees and are taking steps to recover assets from those involved in the scam. The document also provides background on PNB, details on how the fraud occurred, and questions raised about the case.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    205 views17 pages

    Punjab National Bank Scam

    Uploaded by

    Anuj Singh
    This document presents information about the $1.77 billion fraud at Punjab National Bank involving jeweller Nirav Modi. It summarizes that a former PNB employee issued fake bank guarantees without collateral to help Modi secure loans from other Indian banks between 2011-2017. When PNB declined a new loan request in early 2018, the fraud came to light. Authorities have suspended PNB employees and are taking steps to recover assets from those involved in the scam. The document also provides background on PNB, details on how the fraud occurred, and questions raised about the case.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    PRESENTATION ON :-

    PUNJAB NATIONAL BANK


    SCAM

    PRESENTED BY:-
    SHACHI SINGH
    DEEPTI SINGH
    KALPNA YADAV
    AJAY KUMAR
    SATYAM SAXENA
    PRATHAM MAHESHWARI
    About PNB
    Punjab National Bank is an Indian multinational
    banking and financial services company .It is a
    state- owned corporation based in New Delhi,
    India . The bank was founded on 19th May
    1894.As of 31st March 2017, the bank has over
    80 million customers,6937 branches ,and
    10681 ATMs across 764 cities.
    Based on the data available with
    RBI, among state run banks n India , PNB
    topped in the number of loan fraud cases
    across India.
    Beginning of the fraud
    On 14th February, one of India’s biggest banks
    disclosed at a $1.77 billion fraud allegedly by one of
    the country’s richest men,who deals in pearls and
    diamonds.
    In its complaint to CBI (Central
    Bureau of Investigation)- PNB alleged that the fraud
    was led by Nirav Modi, a jeweller.PNB also reported
    that Modi worked with a former PNB employee,
    Gokulnath shetty, who was posted at PNB branch in
    Mumbai from where the fraud originated. Shetty was
    a deputy general manager in the foreign- exchange
    department looking after import payments.
    How The Scam Came Into Force?
    The fraud started dates back to 2011,said
    Rajiv kumar,India’s top bureaucrat for the
    banking sector.Between then and January
    2017,Shetty used several fake PNB letters of
    undertaking – without any collateral – for
    Modi, PNB said.PNB is still investigating how
    this played out.
    What Is This Fraud About?
    PNB has further stated that the Modis and
    companies linked with them colluded with
    Shetty to pull off the heist.The bank claims
    they used fake PNB guarantees worth $1.77
    billion to obtain loans from the overseas
    branches of Indian banks,claiming to need
    the cash to import pearls,according to the
    documents.
    MAIN PERSONS INVOLVED
    Persons involved in the case were –
    Nirav Modi
    Mehul Choksi
    GokulNath Shetty
    How Did It Come To Light?
    It came to light last month,when
    representatives of Modi’s companies
    approached PNB for a fresh loan,PNB said
    in its complaint, the details of which have
    been made public.By then, Shetty has retired
    and his sucessor declined to honor Modi’s
    request.
    Who Bears The Brunt?
    PNB is in talks with other banks and
    liabilities will be decided after the probe,
    PNB Chief Executive Officer Sunil Mehta
    told the reporters. He also added that PNB
    will follow regulator’s instructions on
    repayment.The RBI has not responded to
    emails seeking comment and has not
    publicly commented on the case.
    What Next?
    Government has asked all the banks to send
    reports involving this case or other such
    incidents latest by the end of this week,the
    PTI reported.
    The banking bureaucrat Rajeev
    kumar told that the case is an isolated one .
    About 10 PNB employees have been
    suspended pending CBI investigation, he
    said.He also did not name any of the
    accused.
    Steps Initiated To Recover The
    Money
    In a press conference held in Delhi, Sunil Mehta, MD
    and CEO, PNB,said that the enforcement agencies
    are initiating measures to seize the assets of the
    accused.Without naming the persons,Mehta said
    that the bank is also exploring the possibility of
    getting the customers refund the amount after a
    formal request was made by the persons involved.
    All transactions carried out by
    the employees who have been found guilty will be
    thoroughly investigated, he added . According to
    Mehta, the fraud was noticed by the bank authorities
    on january 25 and a complaint was registered with
    the authorities in less than a week.
    LOU – Letter Of Undertaking
    - LOU serves the purpose of bank
    guarantee
    - In this bank allows its customer to raise
    money from another Indian bank foreign’s
    branch
    - Indian bank ask for sufficient collateral
    security
    - It is generally issue for 90 Days
    Few Points To Consider
    - Collateral security was misssing i.e. LOU
    was issued without consideration
    - LOU was issued for one year instead of
    90 days
    - No link between CBS and SWIFT system
    - Collusion of PNB staff
    - LOU issue without entering in books and
    employees has transmitted SWIFT
    instructions to overseas branches of India
    bank
    What is SWIFT ?
    - Society for worldwide interbank financial
    telecommunication code. An Internationally
    recognized identification code .
    - Whenever bank issue LOU then the bank
    has to communicate about the same to the
    foreign banks of the suppliers via SWIFT
    that they has undertaken the guarantee for
    the payment on behalf of importer
    Measures To Prevent
    - Foreign bank should have examined
    properly the LOU
    - There should be a link between CBS and
    SWIFT system
    - Stronger internal controls
    The Big Thing
    - Its not Nirav modi or choksi alone
    - All government banks are involved in LOU
    like this for Importers exporters
    - If RBI asks all banks to pull up collateral
    and stop such practises,the scale is many
    times larger.
    QUESTIONS RAISED IN THE
    CURRENT SCENARIO..
    - Why PNB gave LOU without collateral for
    such a big amount ?
    - Can only one empolyee do this ?
    - Swift messages and nostro account are
    monitored by one employee only ?
    - Why transactions were not entered in
    the CBS
    - Why LOU not authorized ?
    THANK YOU

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