Timeline to the Discovery of India's Biggest Ever Bank Fraud
(Bloomberg) -- India’s second-largest state-run lender this month disclosed it has been hit by the nation’s biggest ever bank fraud.
Billionaire jeweler Nirav Modi and his associates colluded with a rogue employee at Punjab National Bank to obtain fraudulent guarantees worth $1.8 billion dollars over seven years, PNB alleges. They then used these documents to obtain loans from lenders abroad, according to PNB’s complaint, which has been made public.
As authorities try to contain the fallout from the scam, here’s a look at key dates in the road to discovery:
|2011||PNB employee allegedly starts providing fraudulent letters of understanding to Modi and associates|
|February 2016||Hackers make off with $81 million by sending fake messages through the Bangladesh Bank’s Swift interbank messaging system|
|August 2016||Reserve Bank of India sends a circular to all Indian lenders, advising them to make sure their internal software -- core banking solution or CBS -- is properly integrated with Swift|
|November 2016||RBI issues stronger circular, citing “decentralized” operations that hinder compliance and a “high number” of Swift user IDs at banks that increased the risk of misuse, according to a document seen by Bloomberg. RBI asks banks to “explore” straight-through processing of CBS and Swift|
|Feb. 28, 2017||Banks were due to complete an RBI-mandated verification of all their Swift messages, especially those pertaining to trade finance, to ensure all were “supported by genuine underlying transactions,” according to a document seen by Bloomberg|
|March 15, 2017||Banks were due to report the results of this verification to the RBI|
|May 2017||PNB employee who was allegedly colluding with Modi retires|
|Jan. 16, 2018||PNB alleges that billionaire jeweler Nirav Modi’s associates sought fresh funds from PNB; PNB begins digging into transaction history|
|Jan. 25, 2018||PNB says it found first evidence of fraud|
|Jan. 25, 2018||PNB tells customers it will immediately start updating its CBS to the latest version, which will be used starting Jan. 29|
|Jan. 29, 2018||PNB submits report on fraud to RBI and files complaint with federal investigators|
|Feb. 14, 2018||PNB discloses $1.8 billion fraud|
|Feb. 15, 2018||RBI tells banks to revisit controls outlined in 2016 advisories, according to document seen by Bloomberg|
|Feb. 21, 2018||Banks due to report to RBI on implementation of these controls, according to document seen by Bloomberg|
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