NIRAV MODI PNB SCAM:
AUTHOR- ROSHNI DUTTA (LJD LAW COLLEGE UNDER CALCUTTA UNIVERSITY)
INTRODUCTION:
If we are talking about a legal scam case who can forget about the most famous Nirav modi Punjab national bank case? This case came into the limelight in 2018 which actually exposed a sophisticated web of corruption. In a disguise of a businessman ,Nirav modi scammed thousands of people. Defence minister of India conducted a press conference and blamed Congress for this famous scam. The ironical part of this whole thing is that Punjab national bank received an award for being the “Most Vigilant “ Corporate organization against corruption. The award was given by Central vigilance commissioner. So This scam not only shook the Punjab national bank but also the common people of India and the whole banking system . Several questions arose here. Does that mean the money of the common people is not safe actually?! We are going to discuss the whole scam here and how it effected our Country.
CASE HISTORY :
NIrav modi was s famous jeweller . Jeweller means a company which makes and sells Jewellery . According to CBI he got a fake “ letter of undertaking” ( LoU) issued from the Punjab national bank. LoU means If a person takes loan from a foreign bank, an Indian bank shall issue a LoU or letter of undertaking which is actually a kind of guarantee that if that person taking a loan cannot pay the loan the Indian bank in that case shall pay that loan to the foreign bank with Interest . So the company of Nirav modi made fake letter of undertaking (LoU) eight times and they cheated the banks & took the loan. The total loan amount was huge . Approximately we can say eleven crore rupees was taken from 2011- 2017 but the foreign banks were actually Indian banks in this case having overseas branches so the loan was not repaid, they contacted the Punjab national bank saying that as per the Letter of undertaking the PNB Bank now has to repay the loan but according to Punjab national bank they did not issue any letter of undertaking so after that incident They understood that a fraud has happened so Punjab national bank informed the CBI. Of course fake LoUs were made that means some officials of the bank were also involved in this scam. So basically there is no proper security. There are loopholes. Through the investigation two officials were caught .1. Gokulnath Shetty 2. Manoj kharat and more people were involved. The names are Nirav modi’s uncle Mehul Choksi, Nirav modi’s wife Ami Modi and Nirav Modi’s brother Neeshal modi. Basically after this scam happened both parties Congress ad BJP were blaming each other but the fact is this scam happened both during the Congress’s era and BJP’s era. The first case came in the light in 2011 and the latest case came in 2017. In 2016 there’s a whistleblower who actually wrote a letter in detail to the office of the prime Minister that a scam is happening but neither CBI nor any officials took action and the interesting thing is that this letter was acknowledged by the PM’s office and Mr Hariprasad also received a response back from PM ‘s office that the case has officially been closed. So a lot of questions are there and lot of doubts are raised.
Actually this scam impacted the financial health of The Punjab national bank. It also raised a lot of questions regarding the vulnerabilities of the Indian Banking system and it also showed that there is a need for stricter management system . There is a need to repair the loopholes in the banking system. Later the Reserve Bank of India introduced stricter monitoring system and banking transaction and introduced more norms for securing loan and LoU and LoCs, improved cybersecurity and improved the loopholes to prevent fraudulent activities. At last we can say that It just worked like a catalyst. Nirav modi left India in early 2018 and he was found later in UK and got arrested in March 2019. In December 2019 he was declared as Fugitive Economic Offender according to Fugitive economic Offenders act . In 2021 UK court ruled in favor of his extradition to India . Now he is in custody in UK waiting for further legal trials.
Conclusion:
Nirav modi’s case highlighted the corruption, the loopholes in the Indian Banking system , how the fraudulent activities are happening in India and how it effecting the common people of India .
FAQ:
- What is Nirav modi scam?
Ans: Nirav modi a businessman committed a fraud of taking Fake LoUs and fraudulent transactions amounting to 1100 crore approximately .
- How did that scam happen?
Ans: The scammers used fraudulent LoUs and scammed the Banks . There were loopholes in the banking system so they were not detected for several years
- How did that effect Banks?
Ans: This scam broke the financial health of the bank. Broke to the core of the banking system introducing corruption , lowered stock value and lowered the reputation.
- When did it come in the limelight?
Ans: It came in limelight in early 2018 and After reporting this incident several more incidents were recorded.
- What are the legal proceedings?
Ans: Nirav modi got arrested in March 2019 and is in the custody in UK. Proceedings are going on. UK court ruled in favor of his extradition to India and he appealed his decision. The final outcome of his appeal is pending though.
