ALL INFORMATION ABOUT THE SCAM

2. Lets start from the concept
o Nirav Modi wants to import pearls or diamonds and then sell them.
oNirav Modi approaches a bank, say Punjab National Bank.
oDue to high interest charges…Nirav Modi asks for Foreign currency loan.
oHe again visited PNB and requested to help him by giving a ’letter of
undertaking’
oPunjab National bank agrees but asked for the “COLLATERAL”
o PNB sends a message on SWIFT(Society for Worldwide Interbank Financial
Telecommunication code)
oThe foreign bank trusts only PNB. So it gives the money to PNBs account with
it, called by PNB as a “Nostro”
oPNB then gives NIRAV MODI the money from the Nostro account

3. So What Happens When It’s Time To Pay Back?
• NIRAV MODI has to get the pearls in India, sell
them, receive the money and pay PNB. On the due
date written on the Letter of undertaking.
• Then PNB will pay back the foreign bank saying
okay, we got the customer’s money so we’re giving it
back to you. With interest etc.
• That’s what is supposed to happen. But in reality,
things went little different

4. The Reality: WAY DIFFERENT
• NIRAV MODI might not pay back at all.
• Instead, he asks a PNB official to open ANOTHER
LoU
• The money from the second LoU is used to repay the
first. It’s just rolling over of credit. Over and over.

5. How it came out ?
• LOU were rolling from 2011
• One of the officer retired in 2017 and the new officer
refused to roll over the LOU as he could not find the past
transcations
• No roll over means a default and the foreign bank asks
PNB to pay
• Files FIR to CBI for 280 cr fraud
• Later on the transcation were opened and it was found the
fraud was of 11000 cr

6. The case so far
• Over TEN PNB employees have been suspended and
at least FOUR have been arrested
• NIRAV MODI , His BROTHER , UNCLE and
WIFE are on the run…BUT FOR HOW LONG?
• NIRAV MODI sent a letter to PNB stating that he
owes them much less, under 5000 crores

7. CBI questions to be answered…
• How did Nirav Modi get loans with no security?
• How did bank not realise that 8 LoUs were given without
protocol?
• Why the banks external and internal auditors were unable
to detect the fraud

8. Thank you
presented by : dinesh baid
mba II sem
maism (AMBABARI)