For the first time, the public sector Oriental Bank of Commerce (OBC) has come clean on its loan exposure to the absconding diamantaires Nirav Modi and his uncle Mehul C. Choksi, here on Friday.
The development comes ahead of the OBC's upcoming merger with the Punjab National Bank (PNB) which - in February 2018 - had admitted to a massive fraud perpetrated by Nirav Modi and Choksi running into over Rs 13,500 crore, sending the entire banking industry in a spin.
The OBC has now issued notices declaring the duo and their companies as 'Willful Defaulters' for varying loan amounts, totaling to around Rs 289 crore, at their Large Corporate Branch, Cuffe Parade, Mumbai.
Nirav Modi's companies Firestar International Pvt. Ltd. and Fire Star Diamond International Pvt. Ltd. failed to repay the OBC's loans of Rs 60.41 crore and Rs 32.25 crore, respectively.
Similarly, Choksi's companies Gitanjali Gems Ltd. and Nakashatra World Ltd. have defaulted on OBC's loans worth a total of Rs 136.45 crore and Rs 59.53 crore, respectively.
Days after the scam erupted in February 2018 and it dawned that Nirav Modi and Choksi, along with other accused family members, had sneaked out of the country, the OBC promptly declared their accounts as 'NPAs' on March 21, 2018.
Furthermore, the OBC has warned the masses to desist from entering any kind of deals with the (aforementioned) and appealed to the people to provide information of assets of Nirav Modi-Choksi or their transactions to enable the bank recover the 'public money' due from them.
Banking circles question why it took the OBC a long period nearly 18 months to cough out is exposure in the matter, and just before its proposed merger with the PNB, along with United Bank of India, announced last month by Finance Minister Nirmala Sitharaman.
"Besides OBC, other banks also have exposure to Modi and Choksi, and their group companies. What prevents them all from coming together and take necessary legal action to recover their dues," banking expert and Maharashtra Trade Unions Joint Action Committee (TUJAC) Convenor Vishwas Utagi told IANS.
Utagi said the other bigger questions are: what action has been taken against the departments and officers dealing in foreign exchange in Reserve Bank of India and other affected banks, how much of the outstandings from (Nirav Modi-Choksi and others) accused have been recovered so far and whether the details emerging now are aunder pressure' before the upcoming mergers.
Incidentally, in March this year, the OBC had got a life-saving dosage of Rs 1,186 crore capital infusion and more is expected after the mergers are completed.
Earlier this year, the State Bank of India (SBI) had first bared its chest on a Rs 405 crore outstanding loan from Choksi and his family members.
The SBI's disclosure came barely two days after it became public that Choksi had surrendered his Indian citizenship in favour of the nationality of Antigua & Barbuda Islands, in West Indies.
In March this year, a relaxed and well-dressed Nirav Modi was seen sauntering down a street in London, sparking off a furore in India after which he was arrested by the UK authorities.
Currently, India is making all-out efforts for getting both the uncle-nephew extradited to India and face the laws here.