The Punjab National Bank scam relates to false letter of undertaking worth Rs 10,000 crore issued by the bank. The key person within the case were gem specialist and founder Nirav Modi, his maternal uncle Mehul Choksi, and other relatives and a few PNB representatives. Nirav Modi and his relatives escaped India in early 2018, days some time recently the news of the scam got to be open. PNB scam has been named as the greatest extortion in India’s managing an account history. 

WHAT IS PNB SCAM- to the point

  • In the year 2017, it was found that PNB was included in a gigantic trick of around 10,000 Cr Rupees by issuing wrong bank guarantee  in an deceptive way to a trade tycoon Mr. Nirav Modi. He could be a man dealing with the trade of precious stones along side his uncle Mehul Choksi. 
  • In arrange to import diamonds from outside nations, he approached PNB for the buyer’s credit. Against the buyer’s credit as per the RBI rules the banks ought to inquire for collateral securities. But in this case two workers of PNB controlled the information and without taking any collateral securities issued the LOU which is the Letter of Undertaking issued by the Indian bank which is utilized by the importer to purport products from the remote nations by getting a advance from the Indian banks display within the remote nations.
  • It suggests on the off chance that in case the merchant comes up short to reimburse the credit sum to the remote bank, at that point the Indian bank who has issued the LOU will be held capable for the installment. In this case the credits were taken in 8 diverse ways amid the period of six a long time beginning from the year 2011 to 2017. The foreign banks included in this case are really Indian overseas banks such as Allahabad bank and Axis Bank. As per the keeping money framework any exchanges between Indian and foreign banks is done through Swift system. 
  • Whenever any bank issues LOU it gets consequently recorded in CBS (Core Banking System). But in case of PNB the Swift framework was not specifically connected with the CBS. These things were for the most part done physically within the brady house, Mumbai branch. Both the PNB workers took the advantage of the situation and issued false LOU duplicates to the overseas bank. This was easily proceeding until in January 2018 when the companies of Nirav Modi again drawn nearer the PNB for buyer’s credit. The officer in charge inquired for the collateral security against the buyer’s credit. 
  • The company refused to deliver any collateral security and in this way unveiled that they have been taking the credit since a long time without any collateral security. When the officer after tuning in to the reality experienced for intensive confirmation found no records for the issuance of buyer’s credit to Nirav Modi’s company. Presently this got to be a matter on extraordinary concern for the PNB and they given over the case to CBI. At last, a case was held up against Nirav Modi, His spouse, his brother and his paternal uncle as they were the executives of the companies. This is a case of serious misconduct. 

All about Nirav Modi

Nirav Modi may be a extravagance jewel jeweller and creator who was positioned 57 within the Forbes list of extremely rich people in 2017. He is additionally the founder of the Nirav Modi chain of precious stone adornments retail stores. Modi is the Chairman of Firestar Universal, the parent of the Nirav Modi chain, which has stores in key markets over the globe. He has 16 stores in assorted areas such as such as Delhi, Mumbai, Unused York, Hong Kong, London and Macau. He is as of now within the United Kingdom and is looking for political asylum in Britain. 


Bankers at PNB’s Mumbai branch used fake Letters of Undertakings (LoUs) to favor Indian bank branches for importing pearls, despite Reserve Bank of India guidelines specifying a 90-day time limit from the shipment date. Overseas branches of Indian banks neglected to share essential documents with PNB, which were provided by the firms when extending credit. Nirav Modi obtained his first fraudulent guarantee in 2011 and subsequently acquired 1,212 more over 74 months. The Enforcement Directorate recovered bank token devices from foreign dummy companies, which were used to transfer the fraudulent funds. Properties totaling Rs 2362 crore have been seized in the investigation.


Usually a clear case of Falsification/Fabrication as the records were controlled by the representatives of the PNB and false LOU was issued by them to the foreign banks. Separated from this indeed the banking system of PNB was not that solid since of which the representatives were able to control the things. If the Swift system would have been connected with the CBS, at that point definitely the records of issuance of LOU might be effectively found and it won’t be conceivable on their conclusion to do the exchanges 8 times in a due course of 6 a long time. Thus, it is learnt from this case that upgradation of the keeping money framework of PNB is exceedingly required and all the representatives ought to stand the laws of the organization they are related with. 


1. Who is nirav modi?

Nirav Modi, a extravagance jewel jeweller and creator who was positioned 57 within the Forbes list of extremely rich people in 2017.

2. What is the PNB case also known as?

The PNB case is also known as nirav modi scam case. 


COLLEGE- Asian Law College, Noida

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