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Major offenders not booked, SCI should monitor Rs 114 billion PNB fraud. By Hem Raj Jain

Government of India (GOI) not booking major offenders hence Supreme Court should monitor Rs 114 billion PNB fraud case.

On February 14, 2018, Government-owned Punjab National Bank (PNB) reportedly filed criminal complaint (FIR, the first Information Report) at Central Bureau of Investigation (CBI) that it has discovered a fraud worth Rs 114 billion ($ 1.7 billion) at one of its branch at India’s financial capital Mumbai where firms and people associated with billionaire jeweler Nirav Modi connived with some of PNB officials to defraud the bank using bank guarantees [PNB employees allegedly sent unauthorized letters of undertakings (LoUs), essentially bank guarantees, to foreign branches of Indian lenders, on behalf of firms related to Nirav Modi and the Gitanjali Group].

This fraud is much more than meets the eye. As per statement of Nirav Modi (released in media through his advocate) –“[The PNB could not claim ignorance about the payment remitted abroad on the basis of letters of Undertaking (LOUs) and Foreign Letters of Credit (FLCs) issued by retired deputy manager Gokul Nath Shetty from its Brady House branch in Mumbai because other banks (branches of Indian banks abroad) didn’t pay the suppliers (of Nirav Modi) but to the NOSTRO Account of PNB and the PNB itself paid the suppliers. Moreover, all along the PNB has been taking bank charges from Nirav Modi on these loans / guarantees]”.

When regulatory / supervisory authorities of Banks could not detect and check said fraud then such malpractices by Bank officials is highly likely to be going-on not only in other branches of PNB but in other Public Sector Banks too. Such frauds in the past too are the main reason for non-performing assets (NPA) of billions of dollars (trillions of rupees) of Public Sector Banks in India (which is financial burden on people of economically humble India as these NPAs will ultimately be written-off by GOI with public money).

The way this case of PNB fraud is going-on [where Government of India (CBI) has arrested only the small fishes and there has been no arrest of big fishes (at Finance Ministry, Reserve Bank, PNB etc) responsible for this fraud by their acts of commission and omission] and the way the parties in power (BJP led NDA alliance) and previous Government (Congress led alliance and presently the main opposition) are accusing each other for this massive fraud – [if Supreme Court of India (SCI) does not take the cognizance (even suo-motto) of this monumental loot of public money]- then this fraud will also be brushed under the carpet and will be forgotten by the people after sometime.

The matter related to said PNB fraud is not a rocket science and is mainly concerned with two factors (i)- Granting of loan, guarantees etc against adequate collaterals and procedure for realizing the funds if loan is not serviced as stipulated (ii)- Entry of credits and debits in the books of accounts of PNB and at regulatory / supervisory authorities at RBI and Finance Ministry.

Hence it should not take more than maximum 100 days to complete the investigation. Therefore, SCI should take the cognizance of this matter of this massive fraud in a Public-Sector-Bank and should monitor the investigation of this matter by CBI so that charge sheet can be filed at the earliest in order to facilitate the extradition of the accused (who have fled India) from the foreign countries to face justice in India.