PNB fraud: How Rs 11,300 Cr vanished from 1 a/c

In one of the biggest fraud cases to hit Indian banking, the country's second-largest lender Punjab National Bank (PNB) informed stock exchanges on Wednesday that it has been hit by embezzlement amounting to Rs 11,300 crore at one of its branches in Mumbai.

Here is how the fraud took place:

1. The scam started in 2011. We ourselves found out about the fraud and reported it to the concerned agencies, Punjab National Bank (PNB) MD Sunil Mehta said in a presser on Thursday.

2. We detected the fraud on January 3. We got to know that 2 of our employees did some un-authorized transactions. The bank initiated criminal action against our staff members, the PNB MD said. This is a standalone incident. It has taken place only in one of our branches, Mehta said.

3. We have lodged FIRs and complaints. PNB has capability and capacity to come out of this, Mehta said. We have not shirked in our responsibility, he added.

4. On Thursday, the Enforcement Directorate (ED) registered a money laundering case against diamond merchant Nirav Modi and his relatives along with others and raided over dozen premises across the country connected to them.

5. The premises raided by the ED include Modi's residence in Kurla, his jewellery boutique in Kala Ghoda area, three company locations in Bandra and Lower Parel, three premises in Surat in Gujarat and Modi's showrooms in Chanakyapuri and Defence Colony in Delhi.

6. ED would probe if the allegedly defrauded bank funds were laundered and these proceeds of crime were subsequently used by the accused to create illegal assets and black money

7. The CBI also booked a retired PNB officer and a clerk for helping the businesspersons. Last year, deputy manager (retired) Gokulnath Setty and single window operator Manoj Kharat had issued eight letters of understanding (LoU) worth over Rs 280 crore to Nirav’s company just three months before the former’s retirement.

8. Actress Priyanka Chopra has sued Nirav Modi for not paying her for a diamond advertisement. Priyanka is the global brand ambassador for Modi's jewellery brand.

9. Concerned about the fraud, the finance ministry has asked all banks to send reports involving this case or other such incidents latest by the end of this week.

10. PNB has cautioned other banks about the modus operandi of the scam.