Won't spare those who tried to derail system to help Nirav Modi

Managing Director of PNB Mehta said that the scam was started in 2011 and was detected in the third week of January this year, after which the PNB officials reported it to the concerned agencies.

It said they had occurred at a single branch in India's financial capital Mumbai.

However, Mehta added that the bank has now requested Modi and the accused to appear personally and submit a written plan that details a scheduled timeline of repayment.

Modi, who has not spoken about the case so far, could not be reached for comment.

PNB, which has assets of $120 billion, disclosed the fraud in a regulatory filing on Wednesday, saying it had referred the matter to law enforcement agencies. A bank typically undergoes statutory audit (carried out by auditors appointed by banks), concurrent audit (carried out by outside auditors at the bank branches), internal audit (carried out by bank staff) and the inspection by RBI.

India's Central Bureau of Investigation (CBI) is investigating the allegation that Mr Modi and five others defrauded PNB of $44m in collusion with a deputy branch manager.

"PNB stocks fell 9.8 per cent as investors wondered about the impact of the fraud on the profits or book value of the bank even as they await data about the possibility and extent of recovery that is possible", Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS. PC Jeweller CFO however clarified stance and said the firm is not related to the case in any way.

He added the CBI is also raiding 20 locations associated with him and has seized his Mumbai residence.

PNB shares were trading 4.1 percent lower by 0420 GMT, having fallen as much as 5.7 percent in early trading. The steep fall has wiped tens of billions of rupees off PNB's market value.

On Wednesday, PNB stunned the nation with the disclosure that it had discovered more fraudulent transactions dating back to 2011 involving Modi and some of his group companies perpetrated by some of its employees at a Mumbai branch.

If he doesn't though, PNB is ultimately on the hook as the issuer bank - with other banks like Allahabad Bank having raised a repayment demand through the fraudulently-issued guarantees issued by former PNB officials. iI is now unclear how much Nirav Modi plans on paying back.

The asserted anomalies are relied upon to affect not simply PNB, which had hinted at recuperation as of late in the wake of thinking about a heap of bad obligation, yet a few different banks. The bank said it has informed law enforcement agencies about the transactions.

It is also inconceivable that only 10 people (those suspended) were in the know of things, when even the foreign sellers (who sold the raw diamonds to Modi's firms) held accounts at foreign branches of Indian banks.

  • Joanne Flowers