The alleged fraud at the state-run Punjab National Bank could cost other Indian banks Rs 19,317 crore in the loans and corporate guarantees they provided to the diamond companies tied to billionaire jeweller Nirav Modi and his uncle Mehul Choksi, the Income Tax department said, according to Reuters.
The tax department, in a note read by Reuters, said that as of March 2017, several banks extended loans and guarantees worth Rs 17,632 crore to Modi’s and Choksi’s firms. The note said this amount could have increased over the past year and the total “hit” to Indian banks “may well exceed” Rs 19,000 crore now.
The note is part of the tax department’s preliminary investigation into India’s biggest bank fraud case.
Union Bank of India, Allahabad Bank and Axis Bank were among those that extended credit to Modi and his partners.
The department’s investigation also found that several firms tied to Modi and Choksi listed people of limited means as majority partners, the Reuters report said. The total loans in the three firms belonging to Modi – Stellar Diamond, Solar Exports and Diamonds R Us – was Rs 3,992 crore, while the capital of the partners was Rs 400 crore, the I-T department said.
The amount the three firms were billing customers was also “much higher than total turnover of the three companies involved in the fraud, which shows that goods are being sold for related party and are either over-invoiced or not coming at all”, the investigation showed.
On Saturday, the Central Bureau of Investigation arrested Punjab National Bank’s former Deputy General Manager Gokulnath Shetty, single window operator Manoj Kharat, and authorised signatory of the Nirav Modi Group of Firms Hemant Bhat – the first arrests in the Rs 11.380 crore scam case.
Enforcement Directorate raids in connection with the scam are continuing on Sunday.