Following the PNB fraud's news break, the stock of Gitanjali also fell in tandem. The shares of Gitanjali lost over 12% on Thursday to trade at Rs 51.30 after hitting the intra-day low of Rs 47.50 on the BSE.
Jewellers too under scanner
Three other jewellers, Gitanjali, Ginni and Nakshatra are under the scanner by the federal agencies, CBI and ED, in view of their arrangements with various banks and end use of money, a senior official of a public sector bank told PTI. No immediate comments were available from these companies. Last week, PNB had lodged an FIR with the CBI stating that fraudulent LoUs worth Rs 280.7 crore were first issued on January 16. At the time, PNB had said it was digging into records to examine the magnitude of the fraud.
In the complaint, PNB had named three diamond firms -- Diamonds R Us, Solar Exports and Stellar Diamonds -- saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers, PTI reported. The bank sought 100 per cent cash margins for issuing LoUs for raising buyers' credit, which was contested by the firms, saying they had availed of the facility from as early as 2010.
Nirav Modi, his wife Ami, brother Nishal and Mehul Choksi are partners in Diamonds R US, Solar Exports and Stellar Diamonds, which has shops in foreign locations such as Hong Kong, Dubai, and New York. Among those named is a deputy manager, Gokulnath Shetty, who was posted at PNB's foreign exchange department in Mumbai since March 31, 2010. He had allegedly along with another official Manoj Kharat fraudulently issued LoUs to these firms without following prescribed procedure or making entries in the banking system, avoiding detection of transactions.
"This (investigation) is a part of the clean up drive that started with AQR (Asset Quality Review) in 2015. Post clean up, this is going to make banks clean forever, healthy, responsive and enable them to provide hassle-free banking to all honest borrowers," Kumar said.
A senior official of a public sector bank said there is strict instruction from the finance ministry to all banks that no big fish should go scot-free and no honest borrower is harassed. Banks are now looking at their systems and processes so that such frauds are not repeated, he said, adding all banks have been asked to present a status report as soon as possible.
This could be the biggest banking fraud in India as its quantum was bigger than an estimated 9,000 crore scam at erstwhile Satyam computers. In 2015, Bank of Baroda -- another public sector bank -- had brought to light a scam in which two Delhi-based businessmen cheated it of Rs 6,000 crore (slightly less than $1 billion at that time).