The Nirav Modi PNB Scam is one of India’s biggest banking frauds, involving fraudulent transactions worth ₹14,000 crore ($2 billion USD). It exposed systemic loopholes in India’s financial system, highlighting weaknesses in banking oversight, risk management, and regulatory enforcement.

Key Players

• Nirav Modi: A billionaire jeweler and the prime accused
• Mehul Choksi: Owner of Gitanjali Group and Nirav Modi’s uncle, co-accused in the fraud
• Punjab National Bank (PNB): India’s second-largest public sector bank, where the fraud originated
• Bank Officials: Senior executives at PNB who allegedly bypassed regulatory protocols to facilitate fraud

Facts of the Case

1. Nature of the Scam
   ○ Between 2011 and 2018, Nirav Modi and Mehul Choksi allegedly used fake Letters of Undertaking (LoUs) issued by PNB to secure credit from overseas banks such as Allahabad Bank,
       Axis Bank,  and UCO Bank
   ○ These LoUs were not recorded in the bank’s core banking system (CBS), making the transactions invisible to PNB’s auditors and regulators
   ○ The fraud came to light in January 2018 when a new PNB employee asked for mandatory collateral for fresh LoUs, exposing the scam
2. Scale of Financial Loss
   ○ PNB reported fraudulent transactions worth ₹14,000 crore ($2 billion), one of the largest financial frauds in Indian banking history
   ○ As a result, PNB’s stock price crashed, and the bank required capital infusion from the government to prevent systemic collapse