After Nirav Modi scam at PNB, fear of sweetheart deals at other banks too

These are early days in the Nirav Modi saga, but top financial sector officials are not ruling out more such sweetheart deals at other banks, given that the overseas bill discounting business that traders deal in is highly porous.

The present case has surfaced because an innocuous rule change by the Reserve Bank of India (RBI) in early January forced Punjab National Bank (PNB) to tap Nirav Modi and other importers for more margin money. Another trigger, it would seem, was an alleged query from RBI seeking the bank’s response over one of its officials allegedly demanding favours from Modi’s company in return for issuing the next Letter of Undertaking, or buyer’s credit.

The recent developments have also effectively nixed the bank’s plans to merge any other state-owned bank with itself until the scam fire is doused – and that will take quite some time.
Another associated issue is how two of the bank’s employees continued undisturbed in their perch for so many years.

PMO was aware of the PNB scam almost two years ago: Congress

PNB Scam - The Congress on Thursday said that a whistleblower had alerted the government in 2016 about the Rs 115 billion banking fraud by fugitive diamond merchant Nirav Modi but Prime Minister Narendra Modi and Finance Minister Arun Jaitley ignored the tip.

Congress spokesperson Randeep Surjewala said whistleblower Hari Prasad had written to the Prime Minister's Office as early as July 2016, alerting the government about the "biggest bank loot scam in 70 years" in independent India.

"What does the Prime Minister do? Nothing. What does the Finance Ministry do? Nothing.

What does the Corporate Affairs Ministry do? Nothing. What does the Financial Intelligence Unit of the Finance Ministry do? Nothing," Surjewala told reporters on Thursday.

"You are in power, a fraud is happening under your nose. What were you doing and how did they let the accused escape? Face the truth and answer questions."

He also asked Prime Minister Modi what the fugitive billionaire was doing with him at the World Economic Forum in Davos in January.