presentation

1. BANKING FRAUDS
IN RECENT YEARS.
- BY
SRIDEVI .H.V &RAKSHITA.P

2. 11,400 CRORE
WHAT DO YOU THINK ?

4. Introduction to Punjab National Bank (PNB)
• Punjab National bank is an banking and Financial
service bank owned by Government of India.
• Its headquarters is in New Delhi, India.
• The bank was founded in 1894.
• Punjab National Bank was nationalized in July 1969
along with 13 other banks.
• As of 31 March 2019, the bank has over 110 million
customers, 7,001 branches (7,000 as on 2nd oct, 2018)
and 10681 ATMs across 764 cities.

5. About Nirav Modi
• Nirav Modi, the billionaire is a
luxury diamond jewelry designer
who was ranked 85 in the Forbes list
of India’s billionaires in 2017.
• He is the founder and creative
director of the Nirav Modi chain of
diamond jewelers retail stores.
• He is a wanted person in PNB loan
scam and presently he is under
custody in UK, at Wandsworth
prison.

6. PEOPLE BEHIND THIS SCAM

7. HOW DID PNB SCAM OCCUR ?
• Nirav Modi imported diamonds from foreign country
worth crores of rupees.
• The employees at PNB Brady House branch
fraudulently issued LOU for 365 days without making
any provisions for collateral and by passing Core
Banking System (CBS) .
• The firm also raised funds from Indian banks overseas
branch for paying to the suppliers.

8. HOW THE FRAUD WAS ACCOMPLISHED ?

9. HOW DID IT COME TO LIGHT ?
When representatives of Modi’s companies
approached PNB for fresh loan. By then, shetty had
been retired and his successor declined to honour
Modi’s request. At this, the firms contested that they
have been availing this facility in the past also but the
branch records did not reveal details of any such
facility . PNB said . This was when the fake letters of
undertaking were discovered.

10. EFFECT OF SCAM ON PNB & OTHER
PUBLIC SECTOR BANKS:
• Public sector banks will now have to look back on
every defaulters, and check whether he was genuinely
stressed or just fooling them.
• The stock price of PNB has fallen down from Rs160
to Rs 65.35 ( as on 31 OCT 2019)
• RBI has said to PNB to pay all debts to other banks.
• The RBI to stop issue LOU
• Because of this fraud PNB has lost trust of people.

11. WHY THE SCAM COULDN’T BE
DETECTED EARLIER ?
• The failure of the Auditors.
• No linkages of SWIFT with Core banking
system.
• Management Failure.
• No rotation of employees.

12. INVESTIGATION
• CBI has registered a case against Nirav Modi on Jan 29.
• PNB registered a case against Nirav Modi, Neeshal
Modi, Mehul Choksi on February 13.
• The bank initially reported a scam of Rs. 280 crores but
it was later realized to be Rs.11400 crore.
• Modi left India before the fraud came into light. CBI
arrested at least 13 people, 7 from bank and 6 from
Modi’s and Choksi’s company.
• Investigator has also seized their property including
jewellery and other luxury vehicles.

13. HOW WILL PNB REPAY THIS MONEY?
 Out of 11400 Crores, PNB will try to recover
some of the amount from Nirav Modi’s assets.
The rest will be repaid by the bank using its
own money. The government might infuse some
money to help the bank .

14. MEASURES SHOULD BE TAKEN TO
AVOID SCAM
• Rotation of employees in every three years.
• Better management control.
• Cyber Security.
• Fraud Monitoring.
• Financial Intelligence.
• Customer Identification, authentication and
risk assessment.

15. CONCLUSION
• Rs 71,500 crore worth of bank frauds detected in
FY19: RBI report
• These scam can have a potentially weakening effect on
confidence in the banking system and may damage the
integrity and stability of the economy
• It can bring down banks, undermine the central bank
supervisory role and even create social unrest,
discontent and political violence.
• The passiveness of banks to fraud has been heightened
by techonological advancements in recent times.