Greetings everyone!
Just like another day, Friday being a normal day was not quite normal for the stock market of India. Today, I'd like to share an important news with you all which affected a lot of people in India. The news updates are still flooding the market & the government is taking requisite actions against the fraud.
Punjab national bank
Punjab national Bank (PNB) is the second largest state- lender in the Indian economy. PNB was first created back in Lahore, Pakistan, in 1895. For over 120 years the bank has seen lots of ups and downs but has managed to outperform all the other banks. Recently, on Thursday Punjab National Bank disclosed some fraudulent and unauthorized transactions in one of its branches in Mumbai which links back to Billionaire 'Nirav Modi'.
Nirav Modi
According to a few reports released by Punjab National bank, it is said that the mastermind behind this scam is 'Nirav Modi' & 'Mehul Choksi'. Nirav Modi is a jewelry designer & founder of 'Firestone diamond', which has an annual turnover of about 2.3$ billion in total. Nirav Modi was born and raised in Belgium but then he left for India and started his work under his uncle 'Mehul Choksi' the founder of 'Gitanjali Gems'. Nirav Modi is not a domestic icon but an international diamond merchant with with several shops all around the Globe. He was also listed in the Forbes magazine. Some shops are based in New York, Hong Kong, Macau, London, Mumbai, Surat & New Delhi. He also had his connections in Bollywood & Hollywood as well, actress such as Kate Winslet, Dakota Johnson and Rosie Huntington-Whiteley & Priyanka Chopra from Bollywood was a brand ambassador for his company. Nirav Modi was also one of the participants in the World Economic Forum, 'Davos'.
Fraud
Before getting into all the details I would like to explain few terms to you so that you'll understand the basics and have a fair idea about it.
Buyer's credit
Buyer's credit means loans which are provided to importers by banks and financial institutions outside India which can only be done with the help of Lou's.
Letter of undertaking
Letter of undertaking is issued to a person or bank for imports of the goods after keeping a security of an equivalent amount. It is an inter-bank document.
Swift
Society for Worldwide Interbank Financial Telecommunication code. An internationally-recognized identification code for banks around the world.
For example, if you're a student, you write a test or an exam, which is checked by the examiner following this you get marks based on your performance and later you get your mark sheet or a certificate by the school or university. The marks on your paper and the mark sheet should be equally correct. Now suppose if your mark sheet and actual scores vary from each other, this is a case of fraud.
In this case, Punjab National Bank had issued Lou's to importers and other banks without having any records in the books of accounts or centralized banking system. When importers came to Punjab national bank seeking for another loan, the bank asked the importer for 100℅ cash margin, now the importers were confused about this to which they answered that they have been seeking this facility from early 2011 to which bank contested and found no records. The fraud is worth 11,500 crores, $1.77 billion.
Current Status
Nirav Modi was aware of this situation and was certain that this would happen soon so before the FIR (First Investigation Report) launched against him, he had fled the country in the month of January, his wife is also a citizen of USA who also fled the country in month of January, while Mehul Choksi also did the same. This fraud has not taken a single year or two, these fraudulent activities were taking place since last 7 years.
Currently, their passports have been suspended for 4 weeks and further investigations are carried out by central bureau of investigation, it is also said that Nirav Modi holds a Belgian passport. Also, Central bureau of investigation are seeking help from Interpol. They have been asked to respond within one week why their passports shouldn't be impounded if they fail, necessary actions would be taken. Nirav Modi's current assets all over India are ceased, assets worth 5,100 crore rupees.
While the government keeps blaming each other, its the common man who suffers & is afraid to trust.
---- Written By: @Shivamraichura
---- Edited By: @Ghayas
