The scam that shook India!<\/p>\n
PNB India’s second-largest public sector bank released a disaster on Saint Valentine’s Day i.e., 14th February 2018 by revealing a scam of Rs.11,400 crore directed by one of the country’s richest businessmen of the diamond, Nirav Modi. Nirav Modi had directed and executed the scam with the support of the Deputy Manager of the PNB Mumbai branch named Gokul Nath Shetty and clerk Manoj Kharat. Modi and his Uncle Mehul Choksi schemed with these two people. They’d facilitated the issuance of an unauthorized LOU (Letter of Undertaking) to Modi and his company without following an appropriate procedure PNB had not followed the prescribed procedure for the issuance of LOU to its customer Nirav Modi and encouraged the scam. Whistle-blower Mr. Hari Prasad had transcribed to the Prime Minister\u2019s Office (PMO) in 2016, notifying the govt. for the \u201cbiggest bank loot scam in 70 years\u201d in independent India but the govt took no prompt action.<\/p>\n
What is whistleblowing?<\/p>\n
Whistleblowing is the act of complaining about a flaw that one has discovered. To stand up to the system, however, demands great guts, willpower, and a strong sense of public interest. Even the Whistleblower Protection Act of 2011 took effect in May 2014. Whistleblowing will remain an important component of good corporate governance, but only if such individuals believe they will be protected if they speak up.<\/p>\n
Chronology of the case: –<\/p>\n
\uf0d8\tJanuary 29, 2018: Punjab National Bank (PNB) files a police complaint against Nirav Modi, Mehul Choksi, and others accusing fraud to the tune of \u20b92.81 billion.
\n\uf0d8\tFebruary 17, 2018: The CBI makes the first arrest in the case. Two PNB employees and an executive of Nirav Modi\u2019s group were detained.
\n\uf0d8\tFebruary 27, 2018: A magistrate\u2019s court issues a bailable arrest warrant against diamond trader Nirav Modi.
\n\uf0d8\tJune 2, 2018: Interpol issues Red Corner Notice against Nirav Modi for money laundering.
\n\uf0d8\tDecember 27, 2018: The UK informs India that Nirav Modi is living in the country.
\n\uf0d8\tMarch 9, 2019: British newspaper \u2018The Telegraph\u2019 confronts Nirav Modi on London\u2019s streets and confirms his presence in the country.
\n\uf0d8\tMarch 18, 2019: Westminster Court in London issues arrest warrant against fugitive Nirav Modi.
\n\uf0d8\tMarch 20, 2019: Nirav Modi was sent to Her Majesty\u2019s Prison (HMP) Wandsworth till March 29.
\n\uf0d8\tMay 11, 2020: Nirav Modi\u2019s five-day extradition trial in the PNB fraud case begins in the UK.
\n\uf0d8\tDecember 1, 2020: Nirav Modi\u2019s remand extended, final hearings in 2021.
\n\uf0d8\tJanuary 8, 2021: UK court decides to pronounce judgment in Nirav Modi\u2019s extradition case on February 25.
\n\uf0d8\tFebruary 25, 2021: UK court rules Nirav Modi can be extradited to India to face charges of fraud and money laundering.<\/p>\n
Impact on banks: –<\/p>\n
\uf0d8\tUnion Bank of India- The bank lost -5.8 percent led to Rs 633 crores of erosion in market cap between 12 February closing and 15 February closing.
\n\uf0d8\tAllahabad Bank: The bank’s stock price lost over -9.9 percent till 15 February 2018. Its market cap is eroded by over Rs 484 crores.
\n\uf0d8\tAxis Bank: The share price of the bank lost -3.4 percent till 15 February 2018 and its market value fell by over Rs 4,800 crores.
\n\uf0d8\tSBI: The share price tanked -3.34 percent and its market value fell by Rs 8,329 crores between 12 February 2018 and 15 February 2018.<\/p>\n
Conclusion: –<\/p>\n
\uf0d8\tPNB scam has exposed several banks to credit risk. they only must examine how the method got diluted. and the way some employees in collusion with clients could lead to the scam of an oversized amount of cash for such an oversized time without
\nraising any red flag.<\/p>\n
\uf0d8\tThe role of the regulator bank is also under question now. Though RBI has come up with many risk management processes for banks. RBI should also authorize the bank to deal with fraudsters in a swift manner there by reducing red-tapism.<\/p>\n
References: –
\nNirav Modi case: How PNB was defrauded of Rs 11,400 crore – BusinessToday
\nPNB-Nirav Modi case | Chronology of events – The Hindu
\nNirav Modi case: PNB fraud affects stocks of Union Bank, Allahabad Bank, SBI, Axis Bank – BusinessToday
\nCase Study on Scam in Indian banking industry (Nirav Modi)
\nPramana Research Journal
\nVolume 9, Issue 6, 2019
\nISSN NO: 2249-2976<\/p>\n","protected":false},"excerpt":{"rendered":"
The scam that shook India! PNB India’s second-largest public sector bank released a disaster on Saint Valentine’s Day i.e., 14th February 2018 by revealing a scam of Rs.11,400 crore directed by one of the country’s richest businessmen of the diamond, Nirav Modi. Nirav Modi had directed and executed the scam with the support of the… Continue reading Case Study on Scam in Indian banking industry<\/span><\/a><\/p>\n","protected":false},"author":100247,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[61,9],"tags":[739,1494,1665,137,1664],"class_list":["post-16576","post","type-post","status-publish","format-standard","hentry","category-legal-issues","category-management","tag-banking","tag-case-study","tag-fraud","tag-pnb","tag-scam","entry"],"_links":{"self":[{"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/posts\/16576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/users\/100247"}],"replies":[{"embeddable":true,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16576"}],"version-history":[{"count":1,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/posts\/16576\/revisions"}],"predecessor-version":[{"id":16707,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=\/wp\/v2\/posts\/16576\/revisions\/16707"}],"wp:attachment":[{"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16576"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.sachdevajk.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}