Desperate PNB turns to detectives to trace fraudsters and their assets

Fraud-hit Punjab National Bank (PNB) is now looking to private detectives to help trace the ever-shifting loan defaulters and their assets, as it desperately tries to recover the Rs13,000 crore loan fraud committed by fraudsters Nirav Modi and his uncle Mehul Choksy.

State-run Punjab National Bank, which in February reported the Rs13,000-crore loan default by jewellers Nirav Modi and his uncle Mehul Choksy, the biggest fraud in Indian banking history, has now sought the help of detective agencies in locating the two, their close relative, business associates as also the properties they or their relatives or friends hold in `benami’.
“The policy aims to significantly supplement efforts of the field officials in recovering bank’s dues in NPA (non-performing asset) accounts by utilising services of the detective agencies,” the bank said in an advertisement posted on its website.
Among other, the detectives will have to:
  • Locate the borrower(s)/co-borrower(s)/guarantor(s)/mortgagor(s), (in/outside India), including their legal heirs who are either untraceable or not available at the addresses given in bank’s records;
  • Ascertain latest information about their present address(es)/occupation(s), business(es), income streams, details of their all assets, whether charged or uncharged, their location(whether in India or abroad), value and ownership, etc;
  • Give details of bank accounts maintained by the defaulting borrower(s)/guarantor(s), including their legal heirs; and
  • Gather any other information which the bank cannot access by utilising normal channels like CIBIL/internet/local enquiries and which may be considered necessary by the bank for recovery of the bank’s dues.
The detection should ideally have to be completed ideally within 60 days of receiving details from the bank.
PNB, India’s second-largest state-run lender, unearthed the Rs13,000-crore (nearly $2 billion) loan fraud at one of its branches in Mumbai. The fraud was committed by jewellers Nirav Modi and his uncle Mehul Choksi in collusion with a few bank employees by diverting large amounts of money over a period of seven years. The duo fled the country before the whole operation came to light.
PNB’s NPA problems, however, do not end with Modi and Choksi as they are only part of a bigger problem. As of December 2017, PNB’s gross NPAs stood at around Rs57,519 crore (or 12.11 per cent of its total advances0.
This is expected to increase significantly in the January-March quarter, and the bank is likely to report losses.
These agents will be paid anywhere between Rs2,500 and Rs1,50,000, under various categories, depending on the information gathered. In case of failure to complete the assignment, they will be paid only between Rs3,000 and Rs7,000.
PNB, however, has warned the agencies against using any intimidating tactics. “The supreme court has cautioned the banks against use of coercive methods for recovery of loans and in other similar cases,” the advertisement said.
Besides PNB, several other lenders are also reported to be resorting to such measures. As of December 2017, the industry’s stressed assets stood at nearly 12 per cent of loans.