PM promises 'strict action' against PNB fraudsters

New Delhi: Breaking his silence over the Rs 11,400-crore fraud at India's second-biggest public sector bank PNB, Prime Minister Narendra Modi on Friday said his government would take stringent action against financial irregularities and not tolerate loot of public money.

Days after the fraud allegedly masterminded by diamantaire Nirav Modi came to light; the prime minister asked the management of financial institutions as well as the supervisory bodies to do their job diligently to check such frauds.

"I want to make it clear that this government has been taking strict action against financial irregularities and will continue to take strict action," he said at a Global Business Summit. "System will not tolerate loot of public money," Modi said.

Without naming either the alleged kingpin of the fraud, billionaire jeweller Nirav Modi, or Punjab National Bank, the prime minister said the management of financial institutions, auditors and regulators should perform their duty with full dedication.

In the wake of the Rs 11,300 crore Punjab National Bank (PNB) fraud, the finance ministry on Friday swung into action to set up new regulatory measures. The ministry has written to Hong Kong branches of four Indian banks asking them to reconcile accounts and check for irregularities, as per sources. The four lenders - SBI, Axis Bank, Allahabad Bank and Bank of India - were issued Letters of Undertaking (LoUs) by PNB's Mumbai branch.

These measures are effectively the first definitive steps taken by the finance ministry since the scam broke out, even as government agencies like CBI, ED and Income Tax department have cracked down on the accused. Earlier in the week, finance minister Arun Jaitley had hit out at auditors and supervisory agencies, asking them to "introspect" to avoid cases of financial wrongdoing.

The ED on Friday said it has frozen bank deposits and shares worth about Rs 44 crore of the Nirav Modi group and seized a vast collection of imported watches from locations linked to the billionaire diamantaire.

Officials said they had put freeze orders on bank accounts containing Rs 30 crore and shares worth Rs 13.86 crore of the group under the Prevention of Money Laundering Act (PMLA).

A considerable collection of imported watches, 176 steel almirahs, 158 boxes and 60 other containers have been seized during ED searches at multiple locations linked to the billionaire diamond jewellery designer over last week, they said.

Only Thursday, the agency seized deposits, shares and luxury cars worth over Rs 100 crore of the businessman and his group.

Priyanka Chopra, who featured in one of the advertisement campaigns for Nirav Modi, has terminated her contract with the brand in light of allegations of fraud against billionaire jewellery designer, the actor's spokesperson said on Friday. See also pg6