Bank Fraud Prompts India to Set Up Panel to Prevent Scams

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Arun Jaitley did not specifically refer to the scandal enveloping Punjab National Bank in his speech to a room full of bankers, but his repeated referral to "a stray incident" appeared clearly to be aimed at the massive alleged fraud linked to diamond billionaire Nirav Modi.

Agarwal flew down to Mumbai from New Delhi on Wednesday to represent two employees' of Firestar International, the flagship of Nirav Modi's empire-who have been arrested by the Central Bureau of Investigation (CBI), in the special court. "We have adequate capital coupled with strong non core asset base", said the PNB tweet as multi-agency probe widened into the fraud.

Scam-hit PNB has assured investors and customers that it has a strong sovereign backing and adequate capital to deal with the situation in the aftermath of the Rs 11,400 crore fraud.

"The biggest thing that didn't happen was the linkage between Swift and the bank's back-end software - they didn't talk", said Abizer Diwanji, a financial services partner in India at the accountancy firm EY.

According to the agency sources, Rajesh Jindal was the then manager of the PNB's Brady House branch in Mumbai during 2009 - 11, where the whole issuance of the letters of undertaking (LOU) to Nirav Modi's firms took place during his tenure.

The FIR filed on the basis of a complaint by PNB involves an alleged fraud of Rs 4886.72 crore.

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The documents include applications for LoUs made to PNB by the three firms of Nirav Modi, Diamond R US, Solar Exports and Stellar Diamonds. Defence counsels Amit Desai and Vijay Aggarwal argued that no statements of their clients were recorded by the investigating agency.

Defence lawyers opposed the custody of the accused by telling the court that they revealed to the CBI whatever they knew.

Most of the letters were sent to overseas offices of Indian banks, which sanctioned the actual loans, said Sunil Mehta, Punjab National Bank's managing director.

With today's seizure, the total value of gems and gold jewellery seized by the ED stands at Rs 5,736 crore.

It has also obtained information from a whistleblower in this case who had said he had raised red flags against Choksi's loan in 2013. "We are planning to take legal action to recover the dues", Parvez Ahmad, chairman of Jammu and Kashmir Bank, told Mirror.