Indian banks could take a hit of more than $3 billion from loans and corporate guarantees provided to diamond companies at the centre of a massive alleged fraud at the state-run Punjab National Bank, the tax department has estimated.
As of March 2017, banks had extended loans and guarantees worth 176.32bn Indian rupees (Dh10.06bn) to companies tied to billionaire jeweller Nirav Modi and his uncle Mehul Choksi, the tax department said in a note seen by Reuters.
Since then, the loans and guarantees would have increased over the past year and the total “hit” to Indian banks “may well exceed” $3bn, according to an internal note prepared by the tax authority on its preliminary investigation into India’s biggest bank fraud case.
According to a complaint by PNB, the biggest fraud in Indian banking history involved two junior officials at a Mumbai bank branch issuing “letters of undertaking” to firms linked to Mr Modi and Mr Choksi for them to obtain credit from overseas branches of other Indian lenders.
The bank said these fraudulent transactions had taken place over a number of years and amounted to $1.77bn.
None of these letters of undertaking - essentially credit guarantees - were recorded on the bank's internal software system and instead were transmitted through the Swift interbank messaging system, "thus avoiding early detection of fraudulent activity", the tax note said.
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It said that Mr Choksi’s Geetanjali Gems and its subsidiaries led by Mr Choksi dealt with 32 banks. Among those that offered credit to Mr Choksi and Mr Modi, famous for his chain of stores stretching from New York to Beijing, were the Union Bank of India, Allahabad Bank and Axis Bank, the tax note said.
Union Bank of India, another state-run lender, said on Friday it has an exposure of $300 million as a counter-party lender. Axis Bank, a private sector lender, has said it has sold all its exposure related to the fraud.
Among the findings of the tax department was that several firms in which Mr Modi and his uncle were involved had people of limited means listed as majority partners. Those people were not identified in the tax department note.
The total loans in the three firms of Mr Modi, Stellar Diamond, Solar Exports and Diamonds R Us was 39.929bn Indian rupees, while total capital of the partners was 4bn rupees, it said.
It said the three firms’ “trade receivables”, or the amount being billed to customers, were “much higher than total turnover of the three companies involved in the fraud, which shows that goods are being sold for related party and are either over-invoiced or not coming at all”.
Mr Modi and Mr Choksi have not made any comment so far. Federal police say they both left India in early January and there whereabouts are unknown.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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The rules on fostering in the UAE
A foster couple or family must:
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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