Punjab National Bank discovered a $2 billion fraud allegedly perpetrated by billionaire jeweler Nirav Modi in February 2018. Nirav Modi used fraudulent Letters of Undertaking from PNB employees to obtain loans from other banks. This is one of the largest banking frauds in India. PNB's stock prices fell significantly as a result of the scam and it faces large losses covering the debts owed by Nirav Modi to other banks. The fraud highlights issues with PNB's internal controls and the lack of synchronization between its core banking system and SWIFT messaging platform.

1. SCAM OF PANJAB NATIONAL BANK
Presented to : Miss Khushboo Savaliya
Presented by : Harshita Hirapara

2. PANJAB NATIONAL BANK
• Punjab National Bank was registered on 19 May 1894 under the
Indian Companies Act with its office in Anarkali Bazaar Lahore.
• The Bank opened for business on 12 April, 1895.
• PNB's founders included several leaders of the Swadeshi movement
such as Dyal Singh Majithia and Lala HarKishen Lal, Lala Lalchand,
Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi
Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was actively
associated with the management of the Bank in its early years.

3. Places
• 5000 branches across 764 cities.
• PNB has a banking subsidiary in the UK, as well as branches
in Hong Kong, Dubai and Kabul, and representative offices in
Almaty, Dubai, Oslo, and Shanghai.
• Serves over 37 million customers.
• Employees - 56,928

4. Parties involved in PNB Scam
• Nirav modi
• Mehul choksi

5. PNB Scam
• In February 2018 Punjab National Bank found itself in the center
of one of the biggest fraud in the Indian Banking Sector.
• Nirav Modi is a Wanted person in PNB Loan Scam and presently
he is on the run.
• On 14th February 2018 one of India’s biggest banks disclosed an
almost $2 billion fraud allegedly by one of the country’s richest
men, who deals in pearls and diamonds.
• Panjab national Bank (PNB) is country’s second –largest public
lender is the middle of a RS.11400 crore transaction fraud case.

6. The person who has done it ( Nirav Modi )
• Nirav Modi, the billionaire in the middle of this controversy,
is a luxury diamond jewelry designer who was ranked #85 in
the Forbes list of India’s billionaires in 2017.
• He is the founder and creative director of the Nirav Modi
chain of diamond jewelry retail stores, and is the chairman
of Fire international the parent of the Nirav modi chain,
which has stores in key markets across the globe.

7. List of Forbes

8. How Nirav Modi pull off bank fraud ???
Nirav modi
left India
after his
loan fraud
came into
light
Nirav modi
repeated
same step
to commit
loan fraud
Two staff
members of
PNB obtained
SWIFT key to
approve loan
by fraud
Other
banks send
massage to
PNB to
authorized
application
He used
PNB’s LOU
to get the
loan from
other
banks
Nirav modi
obtained
LOU with
the help of
corrupt
staff

9. Why the PNB scam couldn’t be detected ?
• The failure of auditor
• Not linkage to SWIFT with CBS
• Management failure
• No rotation of employees

10. Exposure of banks
• PNB Rs. 12600 Cr.
• Allahabad bank Rs. 2400 Cr.
• UCO bank Rs. 2635 Cr.
• SBI Rs. 1360 Cr.
• Axis bank Rs. 200 Cr.
• Union bank Rs. 1920 Cr.

11. Effect of scam on PNB and other banks
• Stock price of PNB has decreased from Rs. 160 to Rs. 95
• The NIFTY bank also fallen down 25810 to 24477
• PBI has said to PNB to pay all debts of other banks
• The share price of Gitanjali Gems fallen down from Rs. 64 to
Rs. 15
• The RBI has stopped to issue LOU