Former PNB MD was aware of the Nirav Modi fraud, misled RBI, CBI alleges

The Reserve Bank of India was misled by the senior executives at Punjab National Bank. At the end of 2016 the lender’s handling of the financial messaging system and credit guarantees which were the cornerstone of the $2 billion fraud was deluded-says CBI in the charge sheet filed in court.

PNB ranked second largest state-run bank in the nation, was defrauded by the diamond merchants. The jewelry groups ushered by Nirav Modi and his uncle Mehul Choksi pulled the wool over the bank’s eyes, defrauding it of $2.2 billion by raising credit from the overseas branches of Indian banks by misleading them through illegal vouchers. However, the illegal guarantees were provided to the fraudsters by a PNB scamp at the Mumbai branch.

There was no note of the fraud and fake guarantees as those were transmitted through the SWIFT financial messaging system which is in the heart of the bank’s accounting system- alleged the PNB staff.

In 2016, the RBI had sent a note to all the banks including the PNB that there were some signs of the ill-use of the SWIFT system. Former PNB Chief Executive Usha Ananthasubramanian along with executive directors K.V. Brahmaji Rao and Sanjiv Sharan also turned a blind eye towards corrective measures on the RBI notices- the Central Bureau of Investigation said last week in the court.

Nehal Ahad the accused PNB General Manager “prepared a misleading reply” to the questions of the RBI in October 2016. However, his reply was approved by the RBI officials including Sharan. Withal, the reply said, “outward messages on SWIFT were being sent only after entries in the core accounting software were made”.

The executives of PNB Rao and Sharan are relieved off their duties. The accused have not yet made any comments on the charges levied upon them.

by TNBC Staff Reporter on May 22, 2018

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