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Diamond merchant Nirav Modi’s $1.8 bn scam on PNB will leave the banking sector in disarray

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Diamond merchant Nirav Modi’s $1.8 bn scam on PNB will leave the banking sector in disarray

Even as another multi-billion dollar shady deal within the Indian banking sector comes to light through the Rs 11,292 crore ($1.8 billion) scam by diamond merchant Nirav Modi, political parties have started the blame game, and it is most likely that the suspension of ten employees of Punjab National Bank apart, no other person will be tainted.

Modi himself, quite like liquor baron Vijay Mallya and alleged IPL scam master Lalit Modi, has left the country with his entire family and it’s not sure as of now if India even has an extradition treaty with whichever country he is in. The bankers, of course, will remain untouchable, despite having disbursed public money to scamsters.

Technically, the bank could have stopped payment – these were actually short term loans, called buyer’s credit – at any time on the ‘letters of undertaking’ (LoUs) that it and Modi had signed, allowing Modi to pick up raw diamond from sellers abroad.  These LoUs were signed by PNB and three diamond firms belonging to the Modi Group and some other firms owned by Gitanjali Gems. These companies had opened current accounts at a domestic branch of PNB and,as per the LoUs, money would have been paid by the bank to overseas sellers in foreign currency. This is a common practice, but it would unwise to believe that the bank never did an audit of the money paid and the reimbursements thereafter. That it was a collusion with the clear purpose of a scam is clear.

It is also inconceivable that only ten people (those suspended) were in the know of things, when even the foreign sellers (who sold the raw diamonds to Modi’s firms) held accounts at foreign branches of Indian banks.

The idea of the scam, as disclosed, was that a junior official at PNB fraudulently issued ‘letters of undertaking’, allowing Modi’s companies to get those short term loans from overseas bank branches. Expectedly, the PNB was the guarantor of these loans. A huge number of LoUs would have been done for the amount to reach such gargantuan levels, and in the age of total computerisation of transactions, the bank wants the public to believe that this was the secret work of a select few.

The initial complaint against Modi (in January) was for a Rs 280 crore fraud. Then the bank went to the CBI with the humongous complaint. That was in January 29, by which time Modi had fled the country with his entire family. While Rs 282 crore, in an age of huge scams, did not raise the red flag, the bigger one did. But by that time it was too late to nab Modi.

It has been reported in the media, which have quoted government sources sa saying that Modi and his family fled the country in the first week of January much before the CBI received a complaint from PNB.

It has also been reported that Modi has allegedly sought six months time from PNB to repay the loan.

On 15 February, ED raided nine premises of entities involved in the case.

Leave alone Modi till one can find him. But the bank, like all other banks in such scams, will have a lot of answering to do. This is especially so, because while the BJP says that the Congress should answer because it all started in 2011, the Congress says how come the BJP had no inkling of such a huge scam?

—India Legal Bureau

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Supreme Court flags risk of lawlessness, pauses FIRs against ED officers in Bengal case

The Supreme Court paused FIRs against ED officers in the Bengal I-PAC raid case, warning that obstruction of central probes could lead to lawlessness and seeking responses from the Centre and state.

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Supreme Court

The Supreme Court on Wednesday delivered a sharp rebuke to the Mamata Banerjee-led West Bengal government, pausing FIRs lodged against officers of the Enforcement Directorate over searches linked to political consultancy I-PAC. The court said the case raises serious questions about interference in investigations and warned that failure to address them could lead to “lawlessness”.

A bench of Justice Prashant Mishra and Justice Vipul Pancholi sought replies from the Ministry of Home Affairs, the Department of Personnel and Training, Chief Minister Mamata Banerjee and the Trinamool Congress government on the ED’s plea. The central agency has also sought the suspension of Bengal Director General of Police Rajeev Kumar and Kolkata Police Commissioner Manoj Kumar Verma, and a probe by the CBI. The matter will be heard next on February 3.

The ruling follows a standoff between the ED and the Bengal government after the agency conducted searches at premises linked to I-PAC, which manages election campaigns for the Trinamool Congress, in connection with a corruption case.

Court questions obstruction of central probes

Recording its prima facie view, the Supreme Court said the petition raised a “serious issue” concerning investigations by central agencies and possible obstruction by state authorities.

“There are larger questions which emerge and if not answered shall lead to lawlessness. If central agencies are working bona fide to probe a serious offence, a question arises: Can they be obstructed by party activities?” the bench observed.

Earlier in the day, the court also expressed disturbance over scenes of chaos in the Calcutta High Court during a hearing related to the same dispute.

ED alleges interference, seeks action against top cops

The Enforcement Directorate accused the West Bengal administration of interfering with its searches and investigation. Appearing for the agency, Solicitor General Tushar Mehta alleged that evidence was removed from the residence of an I-PAC co-founder and argued that such actions could encourage state police officers to aid and abet obstruction. He sought suspension of senior police officials.

Describing the disruption in the Calcutta High Court on January 9, Mehta called it “mobocracy”, saying a group of lawyers unconnected to the case disrupted proceedings, forcing an adjournment. The bench asked whether the high court had been turned into a protest site, to which Mehta responded that messages had circulated calling lawyers to gather at a specific time.

Banerjee’s counsel defends move, cites election confidentiality

Senior advocate Kapil Sibal, appearing for Mamata Banerjee, questioned the timing of the ED’s presence in Bengal ahead of Assembly elections. He said the last development in the coal scam case dated back to February 2024 and argued that I-PAC handled election-related work under a formal contract with the Trinamool Congress.

According to Sibal, election data stored at the premises was confidential and critical to campaign strategy. He said the party leadership had a right to protect such information.

Representing the Bengal government and the DGP, senior advocate Abhishek Singhvi referred to the January 9 disruption but argued it could not justify parallel proceedings in different courts. The bench responded that emotions “cannot go out of hand repeatedly”.

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Shashi Tharoor warns US tariffs on Iran could make Indian exports unviable

Shashi Tharoor has warned that cumulative US tariffs linked to Iran trade could rise to 75%, making most Indian exports to America commercially unviable.

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Shashi Tharoor

Congress MP and chairman of the Standing Committee on Foreign Affairs Shashi Tharoor has expressed serious concern over the United States’ latest tariff announcement targeting countries that continue to trade with Iran, warning that such measures could severely impact Indian exporters.

Reacting to the decision by US President Donald Trump to impose a 25% tariff on countries doing business with Iran, Tharoor said Indian companies would struggle to remain competitive if cumulative tariffs rise to 75%. He noted that India was already at a disadvantage compared to several regional competitors.

Tharoor said he had been troubled by the US tariff regime from the outset, pointing out that India was initially subjected to a 25% tariff while rival exporting nations in Southeast Asia were charged significantly lower rates. According to him, countries such as Vietnam, Thailand, Indonesia, Pakistan and Bangladesh faced tariffs ranging between 15% and 19% on labour-intensive goods exported to the US.

He explained that the situation had worsened with additional sanctions-linked duties. With the existing 25% tariff, another 25% related to Russia-linked sanctions, and a further 25% tied to Iran-related measures, the total burden could rise to 75%. At that level, Tharoor said, most Indian exports would no longer be commercially viable in the American market.

While noting that certain sectors such as pharmaceuticals may continue to export as they are not heavily impacted by sanctions, he warned that other key export categories would be hit hard. Tharoor described the situation as very serious and said it required urgent attention.

The Congress MP also expressed hope that the newly appointed US Ambassador could help facilitate progress on a bilateral trade agreement. He stressed that India could not afford to wait through the entire year for a deal and said an agreement should ideally be concluded in the first quarter of 2026.

Commenting on recent diplomatic engagements between India and the US, Tharoor underlined the need for faster consensus on trade issues. He said that at tariff levels as high as 75%, the idea of a meaningful trade deal loses relevance. According to him, a rate closer to what the UK enjoys with the US, around 15%, would reflect the respect due to a strategic partner.

Tharoor’s remarks come after President Trump announced that any country continuing business with Iran would face a 25% tariff on all trade with the United States, a move that has raised concerns among several trading partners.

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Indian Army symbolizes selfless service and duty, says PM Modi on Army Day

PM Narendra Modi on Army Day praised the Indian Army as a symbol of selfless service and unwavering duty, saluting the courage and sacrifice of its soldiers.

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On the occasion of Army Day, Prime Minister Narendra Modi on Thursday paid tribute to the Indian Army, describing its soldiers as a symbol of selfless service who protect the nation with unwavering resolve, even in the most challenging circumstances.

In a message shared on social media platform X, the prime minister said the country salutes the courage and steadfast commitment of Indian Army personnel. He noted that their dedication to duty inspires confidence and gratitude among citizens across the country.

“Our soldiers stand as a symbol of selfless service, safeguarding the nation with steadfast resolve, at times under the most challenging conditions,” PM Modi said. He added that the nation remembers with deep respect those who have laid down their lives while serving the country.

Army Day is observed every year on January 15 to commemorate a historic moment in India’s military history. The day marks the appointment of Field Marshal K M Cariappa as the first Indian Commander-in-Chief of the Indian Army in 1949, when he took over from British officer General Sir F R R Bucher.

The occasion serves as a reminder of the Indian Army’s role in defending the country’s sovereignty and honour, as well as the sacrifices made by its personnel in the line of duty.

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