big hunt for india's biggest thief nirav modi is hotting up more than 11 000 crores siphoned off one of india's biggest banks the punjab national bank this is the biggest corporate fraud that has taken place in india in 2017 forbes magazine released their annual list of billionaires as well as the richest people in india diamond here nirv modi appeared on both lists a few months down the line he was featured in a very different list altogether india's most wanted it all fell apart for nirv modi with a scam a scam that amounted to over 11 000 crore rupees a scandal which shook the entire banking system of our nation modi was born into a family of jewelers and grew up in belgium later he moved to india and started working with his uncle mahul chokshi owner of getanjali gems another co-accused in the scam nirv modi eventually started his own diamond firm fire star and he began making his way up but there were hundreds of jewelers with deep pockets in india so how did nirv modi keep getting the spotlight well this in 2010 nirv modi became the first indian jeweler to be featured on the cover of the auction catalogue of christie's this golconda diamond necklace was eventually sold for 3.56 million dollars enough to have the spotlight on you right see neerav dreamed big and he got down to making those dreams a reality soon he and his designs were being talked about in the elite circles and not just talked about they were being worn too sonam kapoor priyanka chopra anushka sharma and even kate winslet leader modi's designs were a hit across the globe in 2015 neeram modi opened a store on madison avenue in new york followed by stores in places such as hong kong london macau beijing and singapore the declaration of opening a hundred stores worldwide by 2025 reeked of ambition and self-belief nirv modi became a premier luxury brand some sources suggest that even an ipo was in consideration according to the 2017 forbes list his worth was around 1.8 billion dollars but did anyone notice or even think where are all these big bucks coming from all the money that was pumped into his businesses his stores marketing top-tier brand ambassadors all of this well there was certainly rumors author pawan lal recalled that in an interview he questioned neera modi about his funding and the various rumors that was circulating back then one of them being that he borrowed money from banks and maybe he's defaulting modi just brushed it off calling it speculation but what was the truth what was actually the case this is where the brady house branch of punjab national bank is located in january 2018 some officials of niro modi's firms approach the brady house branch of pnb for availing buyer's credit buyers credit basically is a short-term loan provided to an importer by an overseas lender a letter of undertaking or an lou is issued by the importer's bank normally while giving an lou the bank would ask for a cash margin an amount deposited with the bank by the borrower when the bank officials asked for 100 cash margin the officials from modi's firm claimed that they had in the past been allowed credit without any margin and that was the eureka moment see this was very unusual not really the regular practice and when the firms claimed that they had been allowed this even before this raised all sorts of alarm bells the lead role played in this scam is by a document called a letter of undertaking or lou okay so here's what an lou is and how neither modi orchestrated an entire multi-core scam with the help of it an lou is a bank guarantee that allows someone to borrow money from another bank's foreign branch so in case the customer of the bank is unable to pay it back to the foreign branch the bank which issues the lou is liable to pay it back so in this case if niramodi defaulted on any payment to a foreign branch it was pnb's liability the foreign branch is giving the loan on the basis of the lou not on the basis of the credit worthiness of the customer that is neeram miramudi's officials claimed that they had veiled lou's without cash margin in the past without sticking to the norms neera modi was availing these lou's not just in 2017 or 2016 or 2015 but from 2011. so how is this fraud allowed to continue for so long did the higher ups at pnb know anything about this what was the reason that india's second largest government-owned bank continued to be the victim of all of this a few officials were alleged to be involved in this scheme but it doesn't make sense that a scam of this magnitude would go unnoticed by the bank there's another character in this story called swift swift is a messaging network for banks and other financial institutions across the globe when an lou was issued the message was sent through swift now only if pnd could have been alerted by swift but that was a glitch pnb cbs which is basically their core banking system was not synced with swift had that been the case the fraud would have been detected much earlier so the colluding officials of the bank would send information on swift to the overseas branches about the yellow u's but they did not record these entries on cbs and so the fraud carried on for many years nostro account is an account that a bank holds in another bank overseas in a foreign currency now on the basis of the lou the foreign branch would remit the funds to the nostro account of the indian bank in this case access bank allahabad bank uco bank was some of those foreign branches providing funds to pnd's nostro account at that time lo used for gems and jewelry had validity of 90 days but in this case these lo u's were rolled over so how many lo u's were there as per accounts more than twelve hundred yes more than twelve hundred lou's the nero modi was using on pnb's name to get money from foreign branches the fact that a fraud of this scale is not discovered indicates that the audit processes were not thorough enough so many checks and balances were in place and this went on unnoticed for more than six years according to a bloomberg report niro modi also used his shell companies to execute repeated transactions of the same item within the companies to generate invoices for lo use the initial assessment of the fraud made by pnd valued it at around 280 crores but it was later valued at more than 11 000 crore rupees which is a big difference to put it in perspective that was around a quarter of pnb's net worth reported in 2017. some valuations value the fraud amount to be even higher since the scam became public agencies like the cbi and enforcement directorate have become involved stores have been shut people have lost their jobs edie has been attaching properties valuables and other assets in need of modi to recover the amounts due even auctioning off some of his personal collectibles eventually if the recovery is not full the government who is the biggest shareholder in pnb might have to bail it out using the taxpayers money after the scam came out the rbi did start tightening some screw ordering linking of swift with cbs for banks and discontinuing issuance of lo u's for trade credit for imports into india a few days before the scam was unveiled neither modi mehul choksi and some other family members left india in early jan of 2018. in 2019 neera modi was cited in london and he was even questioned by an english journalist on camera he was then arrested after india intervened and has since been in jail in london india's extradition request for need of modi was finally approved by the uk in 2021 and as expected niramodi appealed we don't know when or how niramodi will come back to india or even how his trial will pan out eventually from reaching unprecedented heights in india's ecosystem to plummeting the way he did all this razzmatazz has taken the sheen of india's banking system this is the story of a scam that rocked india's banking system we're on a mission to uncover scams that have affected the people of india and bring them 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