The credit limit exposure of various banks to Nirav Modi’s group companies could swell to Rs 3,000 crore as investigations as many as 26 banks may have provided credit limits to the group, besides the Rs 321 crore that has been provided by Punjab National Bank, as stated in a recently-filed FIR.
As a third FIR was filed with the Central Bureau of Investigation (CBI) relating to the massive Punjab National Bank fraud unearthed last month, in which the government lender has accused Nirav Modi's companies of not using credit limits of Rs 321 crore for "the purpose of which they were sanctioned."
“Almost 26 banks, including PNB, had sanctioned credit limits to Nirav Modi's companies, and the total amount may swell to Rs 3,000 crore. As of now, only PNB has given information on its exposure,” a source in the CBI told Moneycontrol.
This is separate from the over Rs 13,600 crore fraud relating to the LoUs or Letters of Undertaking that were fraudulently issued to companies owned by diamond and jewellery merchants Nirav Modi and his uncle Mehul Choksi.
Credit woes
Nirav Modi's firm Firestar International Limited (FIL) and Firestar Diamond International Private Limited (FDIPL) have got credit sanctioned limit by a consortium of 26 banks.
While FIL got credit limit from 17 banks, led by PNB, in the case of FIDL, Union Bank of India led the consortium of nine banks, sources said.
Emails and calls sent to banks remained unanswered.
An executive from the CBI added that the list also includes private banks. "The agency will start calling senior executives in these banks as it investigates the credit limit case," said the executive.
Some of the bankers have already been questioned by the CBI in first two FIRs.
On January 31, the CBI had registered an FIR against Modi, Choksi and the PNB officials for having committed offences of cheating and fraud thereby, causing a loss of Rs 280.70 crore.
This was pertaining to over Rs 6,200 crore of alleged fraudulent letters of undertaking (LoUs) and Letters of credit (LCs) issued to Modi’s companies by PNB. Modi and Choski, promoter of Gitanjali group are accused in the issuance of LoUs and LCs worth over USD 2 billion (approximately Rs 13,600 crore).
CBI has also conducted two rounds of questioning with Ravi Shankar Gupta, CFO Firestar International Limited.
The second FIR filed on February 15 relates to the issuance of LoUs and foreign letters of credit to firms owned by Mehul Choksi, Modi’s maternal uncle accusing him of having committed fraud causing a loss of Rs 4,886 crore, which later increased to Rs 7,080 crore. The CBI has arrested about 18 people – bank officials as well as executives from firms headed by Modi and Choksi – in this connection.
Third FIR
The complainant in the third FIR is Avneesh Nepalia, Deputy General Manager of PNB's zonal office in Mumbai. The FIR was lodged on March 4.
The CBI source said that an internal investigation revealed circular transactions between Nirav Modi's firms.
"There are fraudulent transaction between these companies and firms namely Solar exports, Stellar diamond and Diamond R US and vice versa during the period between 2013 to 2017, in as much as credit limit sanctioned have not been used which these were sanctioned,” Nepalia said in the complaint.
"We say that a criminal conspiracy has been hatched and the Punjab National Bank has been cheated to the tune of Rs 321.88 crore by Shri Nirav Modi...," he added.
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