Nirav Modi Claims His Companies Owed PNB Under Rs 5,000 Crore  

Nirav Modi, the alleged mastermind behind the biggest banking fraud in India’s history, has claimed that Punjab National Bank’s over-zealousness has shut the doors on his ability to clear dues, which he claimed is much lower than what the bank has gone public with.

In a letter written on Feb. 15/16 to the PNB management, a copy of which PTI has seen, Modi claimed that his companies owed the bank under Rs 5,000 crore.

"The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns. This thereby jeopardised our ability to discharge the dues of the group to the banks," Modi, who left the country along with his family in the first week of January, wrote in the letter.

Also Read: The Banks That Have Exposure To PNB Fraud

PNB, the second largest state-run bank, had on Feb. 14 informed the exchanges that it detected $1.77 billion fraud at its Brady House branch in Mumbai, and named the firms led by Modi and his uncle Mehul Choksi and some other diamond and jewellery merchants as suspects.

The bank has also filed criminal complaints with the Central Bureau of Investigation and the Enforcement Directorate, both of which launched nationwide searches on dozens of offices and residences of the alleged fraudsters.

The bank has named Modi's brother, his American wife Ami, and uncle Choksi besides some others in the first information report.

On the over Rs 11,000-crore loss claimed by PNB in the FIR, Modi said, "as you are aware, this is entirely incorrect and the liability of the Nirav Modi Group is substantially less. Even after your complaint was filed, in good faith I wrote to you saying please sell/allow me to sell Firestar Group, or their valuable assets, and recover the dues not just from Firestar Group, but also from the three firms."

Valuing his domestic business at around Rs 6,500 crore, he said "this could have helped reduce/discharge the debt to the banking system," but quickly added that this is not possible as all his bank accounts have been frozen and assets have been sealed or seized.

He goes on to state that PNB had time and again acknowledged that "the buyer’s credit facility has been extended by it to the three partnership firms since several years; that there has been no default on the part of any of these firms over all these years; that money has gone through PNB over all these years for the repayments of the advances given by the overseas bank branches under the buyers credit.”

Also Read: PNB Fraud: Understanding The Deceptively Low Risk World Of Buyer’s Credit

He also states that PNB has over the years been earning bank charges to the tune of crores of rupees on the buyer’s credit facility extended to the three partnership firms and that PNB has extended the money to the firm's buyers as well from where also it has been receiving full payments, with interest and on time, all these years.

On the valuables that CBI/ED searches yielded Rs 5,649 crore, he said "these, and other assets of the group and the three firms could have settled all the amounts due to banks. However, now that stage appears to have passed."

He concluded by requesting the bank to "be fair, and support my efforts to make good all the amounts that are found due by my group to all banks."

Owning up everything, he said the bank has wrongly named his brother, who is not at all concerned with the operations of the three firms or other companies.

"My wife is not connected with any business operations at all and she has been wrongly named. My uncle is also wrongly named in this complaint since he has an independent and unconnected business and none of them are aware or concerned with my dealings with your bank."