PNB scam: Mehul Choksi seeks cancellation of NBWs, cites fear of lynching

Gitanjali Gems promoter Mehul Choksi, a key accused in the multi-billion PNB scam, on Monday moved a special court in Mumbai seeking cancellation of non-bailable warrants issued against him, claiming that he apprehends mob lynching if he is brought to India.
A special Prevention of Money Laundering Act (PMLA) court had in March and July this year issued non-bailable warrants against Choksi after it took cognisance of the charge sheet filed by the Enforcement Directorate (ED) in the case.

Choksi, in his application moved before the special PMLA court, claimed he faces a threat to his life not only from his former employees and debtors but also from jail staff and inmates (where he would be launched if he returns).
"As it became impossible for the applicant's company to function and the employees were not paid their salaries and debtors did not get their money back, all these persons have become agitated against the applicant and he is now facing threat to his life," the application said.
"There have been various cases of mob lynching in India. This recent trend of mob lynching and general public giving justice on the road is growing. Even the applicant faces a similar threat as there are several persons who have grievances and anger against him (Choksi)," it claimed.
Choksi also faces a threat of extortion by jail staff, and danger to his life by jail inmates if he is brought to India and lodged in a prison here, the application said.
It claimed that Choksi never shied away from the investigation and has responded to all the communication he received from the investigating agencies.
Choksi's ill health, the revocation of his passport and threat to his life are the main circumstances why he is unable to travel to India, it added.
Special PMLA Judge M S Azmi directed the Enforcement Directorate to file its reply on Choksi's application and kept the matter for further hearing on August 18.
Choksi, who is also facing a corruption case filed by the Central Bureau of Investigation, had last month moved a similar application before a special CBI court seeking cancellation of the warrant issued by that court.
The Punjab National Bank (PNB) had earlier detected a multi-crore scam, wherein diamantaire Nirav Modi and his uncle Choksi allegedly cheated the state-run lender to the tune of Rs 134 billion with the purported involvement of a few employees of the bank.
The scam, which reportedly began in 2011, was detected in January this year, after which PNB officials reported it to the agencies concerned.
While the CBI is probing the alleged criminal conspiracy, cheating and other offences under the Prevention of Corruption Act, the ED is probing the money laundering charges.

Banks' NPAs to rise by Rs 80 bn in Q4 on account of Gitanjali Gems

Non performing assets (NPAs) or bad loans in the banking sector are set to shoot up by at least Rs 80 billion as advances to the scam-hit Gitanjali Gems group have turned bad during the quarter ended March 31.
Banks will have to make provisioning of Rs 80 billion for Gitanjali alone as there has been no servicing of the working capital loan during the fourth quarter of last fiscal, sources said.

Gitanjali, among others, is the major account which has turned bad in the fourth quarter of 2017-18.
Gross NPAs of all the banks in the country amounted to Rs 8409.58 billion in December, led by industry loans followed by services and agriculture sectors, as per the government estimates.
Gitanjali is promoted by Mehul Choksi, uncle of billionaire diamantaire Nirav Modi, who defrauded Punjab National Bank (PNB) of over Rs 130 billion by getting fake Letters of Undertaking/Credit (LoU/LoCs) issued from one of the bank's branches in Mumbai.
A special CBI court in Mumbai has issued non-bailable warrants (NBWs) against Modi as well as Choksi.
A consortium of 21 banks led by Allahabad Bank had first extended working capital loan to it in 2010-11. In 2014, ICICI Bank became the lead banker as it had highest exposure of about Rs 9 billion and in line with the revised guidelines of the Reserve Bank of India.
Till December 2017, the loans to Gitanjali Gems were standard and regular debt servicing was being done. There is no servicing of debt in the last quarter ended March 31, so it has to be declared NPA by all banks, said a senior bank official of the consortium.
In 2015, the consortium had restructured working capital loans given to Gitanjali under the joint lenders' forum (JLF) mechanism.
The Gitanjali exposure was classified as a special mention account-2 (SMA-2) in 2014 after the company failed to fulfil its payment obligations for more than 60 days, triggering the formation of a JLF.
As a result, the company announced the consolidation of the business at the group level to improve cash flows and reduce costs in various activities such as sourcing, manufacturing, distribution, exporting and retailing.
It proposed the merger of three of its subsidiaries Asmi Jewellery India and Spectrum Jewellery with Nakshatra Brands and also the merger of Gitanjali Jewellery Retail and Gitanjali Lifestyle with GILI India.
Different investigating agencies, including CBI, I-T and Enforcement Directorate, are probing the fraud, which came to light in January, dubbed as the biggest banking scam in the country.
PNB had issued as many as 1,590 LoUs to Modi, Choksi and their associates.
The total number of LoUs issued to the companies of Modi, his relatives and the Nirav Modi Group are 1,213, while those to Choksi, his relatives and the Gitanjali Group are 377.