Arun Jaitley: Nirav Modi got 1213 fraudulent guarantees in six years

Arun Jaitley: Nirav Modi got 1213 fraudulent guarantees in six years

Arun Jaitley: Nirav Modi got 1213 fraudulent guarantees in six years

Modi and his uncle Mehul Choksi of Gitanjali Group have come under the scanner of multiple investigative agencies in the country for alleged fraudulent transactions and siphoning of funds, a charge that both have denied.

Punjab National Bank told police on Tuesday that it had uncovered additional exposure of about 9.42 billion rupees ($144.83 mln) to Gitanjali group of companies, taking its overall exposure in connection with the fraud to well over the $2-billion mark.

Law enforcement agencies had previously attributed 61.38 billion rupees of the alleged fraud amount to Gitanjali, and almost 65 billion rupees to companies controlled by Modi. They did not have any pre-approved credit limit either.

The RBI issued a circular asking the banks on Tuesday to stop issuing LOUs and Letter of Comforts which acts as an assurance for payments extended by a third party, for imports into India with immediate effect.

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Modifying the High Court order, the top court said: "We hold that mere label of such services can not be treated as conclusive". One of them was passed by Madras High Court on February 21, 2012, and the other by Bombay High Court on December 16, 2009.

"Letters of credit and bank guarantees for trade credits may continue to be issued subject to compliance with the regulations".

PNB says junior employees at the branch issued LoUs over the SWIFT interbank messaging system without entering any of these transactions on the bank's own system.

A senior banker said, "For import of rough diamonds, big suppliers accept only advance remittance".

When Central government is looking upon Central Bureau of Investigation (CBI) for probe into the Punjab National Bank (PNB) fraud case, the agency headed by IPS officer Alok Kumar Verma expressed their limitation in expediting the investigation citing shortage of manpower.

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Both Modi and Choksi are overseas and have refused to return to face trial.

The central bank RBI said the decision to discontinue LoUs and LoCs for trade finance comes into force with immediate effect.

According to him, LoUs were generally used by large players in gems and jewellery sector. CBI and Enforcement Directorate officials are looking into the case.

Last month, Nirav Modi commented saying, that PNB had closed all doors of recovering dues for his brand by going public.

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