Share Department, Department, Finance Division,

HO Plot No. 4 Sector 10, Dwarka, New Delhi-110075

Tel Nos : 011-28044866 E-mail : 

Script Code : PNB Script Code : 532461
The Asst. Vice President

National Stock Exchange of India Limited “Exchange Plaza”,

Bandra – Kurla Complex, Bandra (E),

Mumbai – 400 051

The Dy, General Manager

Bombay Stock Exchange Limited

1st Floor, Phiroze Jeejeebhoy Towers

Dalai Street, Mumbai – 400 001

Date: 15-02-2018

Dear Sir,

Reg.: Clarification/confirmation on news item

With reference to the media reports regarding “ED raids offices of Nirav Modi, PNB and Gitanjali gems”. We submit as under:

A) Whether such event stated in published news were taking place?

If so, you are advised to provide the said information along with the sequence of events in chronological order.


On 16.01.2018, the partnership firm of Nirav Modi group approached our branch at Brady House, Mumbai and presented a set of import documents with a request to allow buyers’ credit for making payment to the overseas suppliers. Since there was no sanctioned limit in the name of the above firms, the branch officials requested the firms to furnish at least 100% cash margin for issuing Letter of Undertaking (LOU) for raising buyer’s credit. On denial, the firms contested that they have been availing such transactions since past several years.

On scrutiny, it was observed that earlier Issuance of Letter of Undertakings (LOU) had been made by the branch officials through SWIFT (The Society for Worldwide Inter bank Financial Telecommunication) without obtaining approval of the competent authority, necessary applications from Importer, documents of import, legal documentation with bank and also without making entries in Bank’s trade finance module of CBS system.

A series of meetings were held with representatives of Nirav Modi group and Gitanjali group at Delhi & Mumbai to impress upon them to pay the amount. They were also directed to provide all necessary documents as per law to ensure that the imports are bonafide trade transactions.

Upon confirming the first maturity of LOUs liabilities on 25.01.2018 as fraudulently credit against the bank, an FMR-1 (fraud report format of RBI) was submitted to RBI on 29.01.2018 amounting to USD 44.22 mio equivalent to Rs. 280.70 crore (related to 3 group firms of Nirav Modi).

On 29.01.2018, a criminal complaint for registration of FIR against accused persons including the maker & checker employees of the bank for offence of cheating of fraud was filed with Joint Director (Policy), Central Bureau of Investigation and same stands registered on 31.01.2018.

On 05.02.2018, BSE, NSE stock exchanges were informed of fraud of Rs.280.70 crores in Nirav Modi group.

In addition to above, Nirav Modi Group firms, upon confirming the maturity of LOUs liability on 09.02.2018 of Gitanjali group companies, fraud report was submitted to RBI on 07.02.2018 amounting to USD 10.20 mio equivalent to Rs. 65.25 crore (related to 2 companies of Gitanjali group promoted by Mehul Choksi).

Simultaneously a criminal complaint for registration of FIR against accused persons for offence of cheating of fraud was filed on 07.02.2018 with Joint Director (Policy), Central Bureau of Investigation. During this period further LOUs of USD 59.23 mio equivalent to Rs. 379.28 crore also matured for Nirav Modi Group. We have mentioned in CBI complaint this issue and reported that since investigation is underway we shall be reporting crystallized amount of fraud after completion of detailed investigation.

While investigation process is on, 10 officers/employees were suspended on account their suspected involvement in the fraud.

Foreign bank branches namely Allahabad Bank, Hong Kong, Axis Bank, Hong Kong and other banks were requested to provide all communication with borrower and documents, if any held in their record to understand bonafide of the transactions

On 12.02.2018, on the basis of investigation report, total fraud of Rs. 11394.02 crore in case of unauthorized issuance of Letters of Undertakings, Foreign Letter of Credits and Inland Letter of Guarantees in the group accounts of Nirav Modi Group & M/s Gitanjali Group and in the account of M/s. Chandri Paper & Allied Products Pvt. Ltd. reported to RBI.

On 13.02.2018, FIR filed with CBI against above 2 groups and M/s Chandri Paper & Allied Products Pvt Ltd.

On 13.02.2018, Bank also files complaint to Enforcement Directorate on 13.2.2018.

On 14.02.2018, BSE, NSE exchanges were informed.

B) The material impact of this article on the company The bank liability is contingent only. The liability shall be decided based on the law of land.
C) Whether company are aware of any information that has not been announced to the Exchanges under Regulation 30 of Listing Regulations. If so, you are advised to provide the said information and the reasons for not disclosing the same to the Exchange earlier as required under Regulation 30 of the Listing Regulations. Yes. The information of fraud of Rs. 280.70 crores stands reported to Exchange on 05.02.2018. Subsequently on receiving investigation report on 12.02.2018, incident of total fraud amount of Rs. 11394.02 crore stands reported to Exchange on 14.02.2018.

Submitted for information please.

Thanking you

Yours faithfully

(Balbir Singh)

Company Secretary

Download Clarification/confirmation on news item issued by PNB

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8 responses to “PNB clarifies on alleged Scam by Nirav Modi and Gitanjali group”

  1. Prem C Upadhyay says:

    It appears some senior officers were also involved in issuing LOU’s. How could a deputy manager issue such Lou’s without informing the relevant authorities?
    Looks like a total collapse of the system in place in the Bank.
    Suggest a deeper and serious investigation, including political connections/influencing the bank officials. needs to be carried out.

  2. sudarshan says:

    it is contingent now. On presentation by foreign importers, it mayl become liability as PNB should honour their commitment made to foreign bank or indian bank of foreign branch.

  3. AJAY RASTOGI says:

    This all happened only negligence of performing their duty by senior banks official , resulting a big fraudulent of public secured money , let us assume if a middle class man involved indirectly a small scam of Rs.2-3 lac , banks recover the same from the individual by forcefully or with legal drama , why on here should proper recovery procedure proceeds for peoples honest money, if still not recovered , then go to cut one month pay of every bank official to fulfill the fund of public money.

  4. vsnmurty says:

    It is not clear whether rs 11500cr is an incurred loss or contingent loss to be incurred on devolvment of lou.

  5. Kedar says:

    Has any of the bankers who has advanced money to the borrowers has classified borrowers’ accounts NPA in their books ?

  6. T Sampath says:

    It is high time that the government of India should Start conducting detailed investigation & inspection in Other Public Sector banks including SBI & make the TAX Payers to know about the sincerity & accountability of all the Bank Officials & employees

  7. Srinivas Dasari says:

    The staff involved in this should be suspended and sealed their property including properties of immediate family (unless it proved that property made from self earnings). If defaulter unable to pay, this property should be auctioned and repaid the debt.

    Why taxpayers money should use to repay.

  8. Sekaran says:

    The penalties are paltry and too easy on the white collar criminals. Until they are exemplary and deterrent the criminals will run away like Mallya and Nirav and so many others during the UPA regime. For this the action by the highest govt is called for overruling all court proceedings and worthless CBI investigations. Until then All govt promises are not even worth the paper they ate printed on.

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