In what has been dubbed as the biggest fraud in India's banking history, PNB, the country's second-biggest state-run lender, said last month it had been defrauded of about $2 billion by two jewellery groups who raised credit from overseas banks based on fraudulent guarantees issued in collusion with rogue PNB staff. These steps will help in ensuring quick response in case of frauds. "Now passport details a must for loans more than Rs 50 crore".
The decision has been taken almost a week after the Cabinet approved the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of Rs 12, 636 crore. Several big defaulters like Nirav Modi, Mehul Choksi, Vijay Mallya and Jatin Mehta have fled the country putting the recovery mechanism in quandary.
They have refused to return and said that recovery will be hard since their brand Geetanjali jewelry was diminished in value due to the ongoing investigation.
Law enforcement agencies had previously attributed Rs6,138 crore of the alleged PNB fraud amount to Gitanjali, and almost Rs6,500 crore to companies controlled by Modi.
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According to the draft bill, assets of fraud-accused Indians can be impounded and sold by the government. It also will apply to defaulters who have an outstanding of Rs 100 crore or more and have escaped from the country.
PNB, the second largest state-run bank, had on February 14 informed the exchanges of detecting Dollars 1.77 billion fraud at its Brady House branch in Horniman Circle area of south Mumbai and named the firms led by Modi and his uncle Mehul Choksi's Gitanjali Group and some other diamond and jewelry merchants as suspects.
While the finance ministry is trying to clear out the banking mess, it must also look at loans below Rs 50 crore because fraudsters may have borrowed money in the name of multiple family members in smaller amounts to avoid suspicion or detection.