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30 banks, including PNB, to face forensic audit to trace Nirav Modi fraud case's footprint

A staggering 30 banks will be part of the forensic audit, besides Punjab National Bank, to trace and track the chain of money movement that eventually ended up as a gigantic Rs 11,400 crore fraud.

Published: 17th February 2018 02:02 AM  |   Last Updated: 17th February 2018 06:24 AM   |  A+A-

Nirav Modi (File Photo | Indulge Express)

Express News Service

MUMBAI: A staggering 30 banks will be part of the forensic audit, besides Punjab National Bank, to trace and track the chain of money movement that eventually ended up as a gigantic Rs 11,400 crore Indian banking fraud.

Some of the banks include SBI, IDBI, Allahabad Bank, Canara Bank, Bank of Maharashtra and Oriental Bank of Commerce. This is by far the biggest and also one of the unique audits involving multiple lenders in recent times. Its outcome will be used as evidence in court to prosecute the key perpetrator and diamantaire Nirav Modi and his firms and Mehul Choksi, promoter, Gitanjali Group, for fraud, embezzlement and other financial claims.

Sources said the audit will be completed within three months, which will then be submitted to the RBI, and circulated on the regulator’s Central Repository of Information on Large Credits (CRILC) platform for use among banks and financial institutions. “We will take a coordinated approach to track the criminal actions, exchange details on modus operandi, and for subsequent follow up for recovery,” a senior banker told Express.

As per RBI’s master direction on frauds, revised in July 2017, in case an account is classified as a fraud and falls under multiple banking arrangements (like in PNB’s case with several banks party to the transactions), the account should be red flagged by all banks, initiate a forensic audit and lodge complaints with the CBI and law enforcement agencies. All this should be completed within six months.

A joint probe helps detect instances of fund diversion or if same securities or fake invoices were offered by borrowers to different banks. “Lack of a formal arrangement for exchange of information among various lenders delays detection and resolution of fraud,” the banker said.

Big frauds in 5 years
- According to a recent Reuters report, state-run banks together witnessed frauds aggregating $9.58 billion in the past five years

- The current PNB fraud size is $1.77 billion

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