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PNB scam: Here’s how Mehul Choksi and Nirav Modi orchestrated India’s biggest banking fraud

The arrest of Mehul Choksi has brought back focus on the Rs 14,000 crore PNB scam involving Nirav Modi and a network of fake credit guarantees.

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PNB scam

By Mohammad Javed Rasheedi

The arrest of fugitive businessman Mehul Choksi in Belgium has once again turned attention to one of India’s most significant financial frauds—the Punjab National Bank (PNB) scam. The Rs 14,000 crore fraud, which came to light in 2018, involved Choksi and his nephew Nirav Modi, who colluded with bank officials to illegally obtain credit guarantees using forged documents.

Choksi, who was reportedly living in Antwerp with his wife after securing residency in Belgium in late 2023, was arrested on April 12 from a hospital. His detention follows extradition efforts by Indian authorities, including the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), who have been pursuing him for years.

What was the PNB scam?

The fraud involved fraudulent issuance of Letters of Undertaking (LoUs) at PNB’s Brady House branch in Mumbai. Choksi’s firm, Gitanjali Gems and other entities linked to Nirav Modi, used these LoUs to obtain credit from foreign banks—far exceeding regulatory norms. These guarantees, worth thousands of crores, were issued without proper sanctions, security, or entries in the bank’s core system.

Investigations revealed that Choksi and Modi used the SWIFT network to communicate with overseas banks without updating PNB’s internal banking software, thereby bypassing oversight. This led to an estimated Rs 6,344 crore loss to PNB alone, as multiple Indian banks including SBI and Axis Bank released funds based on the fraudulent LoUs.

Timeline of the scam’s discovery

The scam began unravelling in early 2018 when employees from companies like Diamonds R Us, Solar Exports and Stellar Diamonds requested LoUs and were denied due to lack of margin security. Upon further checks, PNB discovered that such requests had been routinely granted in the past without collateral.

PNB filed a complaint with the CBI on January 29, 2018, naming Nirav Modi, Mehul Choksi and other accomplices, including bank officials. The initial fraud amount stood at Rs 280.7 crore but ballooned to over Rs 14,000 crore within months.

Nirav Modi first received a fraudulent LoU in March 2011 and went on to obtain over 1,200 such guarantees. The ED found that dummy companies abroad were used to funnel money and devices used for these transactions were allegedly destroyed by Nirav’s brother, Nehal Modi.

Modi fled India before formal charges were filed, applied for bankruptcy protection in New York in 2018, and was arrested in London in March 2019. He continues to fight extradition to India.

Mehul Choksi was declared a fugitive in early 2018 and fled India citing medical issues. He acquired Antiguan citizenship in 2017 and later tried to flee to Cuba in 2021. He was intercepted in Dominica and later returned to Antigua. He then reportedly moved to Belgium for medical treatment, where he was arrested following India’s renewed extradition request.

The Enforcement Directorate has seized assets worth Rs 2,362 crore linked to Choksi, spread across Thailand, Dubai, Japan, the US, and other locations. Coordination is ongoing with international authorities to recover and repatriate more assets.

India News

Nawaz Sharif urges Shehbaz Sharif to pursue diplomacy over aggression against India

Nawaz Sharif has advised Prime Minister Shehbaz Sharif to avoid aggression and focus on diplomacy following India’s suspension of the Indus Waters Treaty.

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Nawaz-Sharif

In a significant development amidst escalating regional tensions, former Pakistan Prime Minister Nawaz Sharif has urged his younger brother and current Prime Minister, Shehbaz Sharif, to adopt a diplomatic approach rather than an aggressive stance towards India.

During a meeting in Lahore on Sunday evening, Shehbaz Sharif briefed Nawaz Sharif about the government’s recent actions against India, following India’s decision to suspend the Indus Waters Treaty (IWT) after the Pahalgam attack. The Pakistani government, in response, had closed its airspace for India and reportedly stepped up its readiness to counter any hostile moves.

Sources indicate that Shehbaz Sharif expressed concerns about India’s suspension of the water-sharing agreement, warning that it could escalate tensions dangerously in the region. He emphasized Pakistan’s preparedness to respond strongly if necessary.

However, Nawaz Sharif, founder of the ruling Pakistan Muslim League-Nawaz (PML-N), advised a more measured path. He recommended using all diplomatic avenues to de-escalate tensions and restore peace with India. Nawaz Sharif stressed the importance of avoiding any aggressive actions that could worsen the situation.

In a related move, Pakistan’s Defence Minister Khawaja Asif has suggested the formation of an international commission comprising representatives from countries like the United States, Russia, China, and Britain to investigate the Pahalgam attack, seeking broader international involvement in addressing the conflict.

The ongoing situation between India and Pakistan remains delicate, with calls from within Pakistan’s leadership for calm and dialogue to prevent further deterioration.

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Asaduddin Owaisi criticises Bilawal Bhutto’s remarks amid Indus Waters Treaty row

Asaduddin Owaisi hits out at Bilawal Bhutto Zardari for his provocative “blood will flow” remark after India suspended the Indus Waters Treaty, highlighting the tragic consequences of terrorism.

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Pakistan Foreign Minister Bilawal Bhutto Zardari

AIMIM leader and Hyderabad MP Asaduddin Owaisi has strongly rebuked Pakistan People’s Party (PPP) leader Bilawal Bhutto Zardari over his controversial statement following India’s suspension of the Indus Waters Treaty. Owaisi reminded Bhutto of the tragic assassinations of his mother, former Pakistan Prime Minister Benazir Bhutto, and grandfather, former President Zulfikar Ali Bhutto.

Bilawal Bhutto, who was Pakistan’s Foreign Minister till 2023 and remains an influential figure in the ruling coalition, had issued a provocative warning after India’s decision, reportedly saying, “The Indus is ours and will remain ours – either our water will flow through it, or their blood.”

Responding to these remarks, Owaisi said Bhutto should reconsider his words, recalling how terrorism claimed the lives of his mother and grandfather. “Forget about such childish talk. His mother was killed by terrorists. He should not speak in this manner,” Owaisi said, stressing that terrorism must be condemned universally and not selectively.

Owaisi also criticised Pakistan’s leadership for threatening India with nuclear weapons, highlighting the brutality of recent terror attacks. “If you enter a country and kill innocents, no nation will remain silent,” he said. He compared extremist elements to the Khawarij and ISIS sympathisers, known for their radical ideologies.

The assassination of Benazir Bhutto in Rawalpindi in December 2007 has long been linked to extremist groups, though the case remains unresolved.

Bilawal Bhutto’s comments have sparked wide condemnation across India’s political spectrum. Union Minister Hardeep Singh Puri suggested that Bhutto should undergo a mental health evaluation, while Congress MP Shashi Tharoor labelled the remarks “inflammatory.” Tharoor warned that any aggression from Pakistan would be met with an appropriate response, asserting, “If blood is going to flow, it will possibly flow more on their side than ours.”

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India inks Rs 63,000 crore deal for 26 Rafale-M jets to strengthen naval fleet

India has signed a ₹63,000 crore deal with France to acquire 26 Rafale M fighter jets, strengthening the Navy’s capabilities aboard INS Vikrant and INS Vikramaditya.

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India has finalized a major ₹63,000 crore agreement with France for the acquisition of 26 Rafale M fighter jets, enhancing its maritime strength significantly. This government-to-government deal, signed on Monday, includes 22 single-seater and four twin-seater trainer variants, with delivery expected by 2031.

The deal not only covers the procurement of the jets but also includes comprehensive fleet maintenance, logistical support, and training for Navy personnel. In a notable boost to the ‘Atmanirbhar Bharat’ initiative, indigenous manufacturing of several components will be undertaken under offset obligations.

The Rafale M, currently operated only by the French Navy, is renowned for its superior capabilities among naval fighter jets globally. It features Safran Group’s reinforced landing gear, folding wings, and a robust undercarriage designed to endure the tough conditions of carrier-based operations.

The Indian Navy plans to deploy these new Rafale-M fighters aboard its aircraft carriers, INS Vikrant and INS Vikramaditya, replacing the ageing fleet of MiG-29K aircraft. This move is expected to significantly bolster India’s maritime defense capabilities, especially amid rising security challenges in the Indian Ocean region.

In December, Navy Chief Admiral Dinesh Tripathi emphasized a strategic shift to “negate” any infringement in India’s operational areas, highlighting the preparedness to counter threats from neighboring regions.

India’s Air Force, which already operates 36 Rafale ‘C’ variant jets from northern bases, will also benefit indirectly through upgrades to systems like the ‘buddy-buddy’ aerial refueling capability, allowing fighter jets to stay airborne for extended missions.

Looking ahead, the Navy is also progressing toward the induction of indigenous fifth-generation, twin-engine deck-based fighters, being developed by the Defence Research and Development Organisation (DRDO). These fighters will complement the Air Force’s upcoming Advanced Medium Combat Aircraft (AMCA), further strengthening India’s air and maritime security architecture.

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