April 8, 2018 / 1:15 PM / 3 months ago

CBI's special court issues warrants against Nirav Modi, Mehul Choksi in PNB fraud case

NEW DELHI (Reuters) - A special court of the Central Bureau of Investigation (CBI) issued non-bailable warrants against jewellers Nirav Modi and Mehul Choksi, who are central figures in an alleged $2 billion scam at state-run Punjab National Bank (PNB), according to a source within the investigative agency.

A man talks on a phone as he walks past a Nirav Modi showroom during a raid by the Enforcement Directorate, a government agency that fights financial crime, in New Delhi, India, February 15, 2018. REUTERS/Adnan Abidi

The CBI is now also questioning some officials at overseas branches of Indian banks which issued loans to companies owned by the two jewellers against bank guarantees - later shown to have been fraudulently issued by certain rogue employees at PNB.

The case, dubbed India’s largest ever bank fraud, has led to a huge probe and 20 arrests have been made so far in relation to the matter.

The court in Mumbai approved the CBI’s application to issue non-bailable warrants against Modi and Choksi in the PNB fraud, said the agency source, who asked not to be identified.

Modi and Choksi have denied the allegations against them and authorities say they both left the country before the fraud was uncovered in February. PNB has said it is working with the investigators and regulators probing the fraud case.

The CBI is also questioning officers of overseas branches of Indian banks that extended credit facilities on the basis of the fraudulent letters of undertaking (LOUs), issued by employees of PNB, the source said.

The agency has also summoned an officer dealing with foreign exchange at Allahabad Bank’s Hong Kong branch, for questioning, the source said. Allahabad Bank has previously denied any wrongdoing.

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Reporting by Nigam Prusty,; Writing by Manoj Kumar; Editing by Euan Rocha and Susan Fenton

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