Punjab National Bank detects fraudulent transactions of over $1.7 billion

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Shares of Punjab National Bank (PNB) tanked 10 per cent on Wednesday soon after the public sector lender informed bourses about a financial fraud of over Rs 11,000 crore at one of its Mumbai branches.

The name of the fraudulent is not disclosed by the bank yet, but the CBI has registered the case against four people who might have involved in the conspiracy.

This case is likely to create a challenge for CEO of the bank Sunil Mehta, who took charge in May previous year.

On January 2017, The Indian Express had reported that the income tax department had raided over 50 offices and residential premises of Modi, one of India's top diamond merchants, and seized cash, jewellery and several documents that allegedly revealed tax evasion by his firms.

All partners of Diamon R US, Solar Exports and Stellar Diamonds and PNB employees Gokulnath Shetty and M H Kharat were also named in the FIR. Other lenders give credit based on the letter of undertaking issued by a bank. The latest development comes in the backdrop of the bank detecting fraudulent and unauthorised transactions worth about Rs 11,300 crore at one of its branches in Mumbai. As the jeweller was unable to provide this, the facilities were withdrawn, leading to a collapse. "In the Bank, these transactions are contingent in nature and liability arising out of these on the Bank shall be decided based on the law and genuineness of underlying transactions", it said.

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In 2015, Bank of Baroda - another public sector bank - had brought to light a scam in which two Delhi-based businessmen cheated it of Rs 6,000 crore (slightly less than Dollars 1 billion at that time).

The Enforcement Directorate, under the revenue department of the finance ministry, had arrested the businessman duo under money laundering provisions.

Two different complaints have been registered by the bank authorities with CBI against the billionaire fashion designer Nirav modi and a jewellery brand in this connection on Tuesday night, according to sources. "The bank is committed to clean and transparent banking", said PNB.

The CBI has acted on a complaint from the PNB, which alleged that Modi, his brother Nishal, wife Ami and Mehul Chinubhai Choksi were in conspiracy with officials of the bank and cheated it, causing "wrongful loss".

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