Congress Government Could Have Stopped PNB Bank Fraud: Ex-Bank Official

New Delhi: The Congress-led UPA could have stopped India's biggest bank scam, a former officer of the Allahabad bank said on Friday, claiming that he had flagged concerns about loans to Gitanjali Gems, one of the companies being investigated by the CBI in the Punjab National Bank fraud case.

Dinesh Dubey, a former Director of the Allahabad Bank, said: "I had sent a dissent note against Gitanjali Gems to the government and the RBI (Reserve Bank of India) in 2013 but to no avail, I was directed that this loan has to be approved, I was being pressured so I resigned."

In his note, Mr Dubey is reported to have argued that Gitanjali Gems should first return Rs 1,500 crore loan given to it earlier before a fresh loan amount could be cleared. Gitanjali Group is owned by celebrity designer Nirav Modi's uncle and business partner Mehul Choksi.

The BJP, which has been facing sharp attacks from the opposition for celebrity designer Nirav Modi exit from the country way back in January, promptly cited Mr Dubey's statement to hit back at Mr Gandhi.

"On September 13, 2013, Rahul Gandhi visited Nirav Modi's jewellery exhibition at a hotel in Delhi and the very next day Allahabad Bank approved the loan to him, despite the fact that it was opposed by one of the bank's directors Dinesh Dubey," Union Minister Prakash Javadekar said, asking the Congress to come clean on Mr Gandhi's links with the billionaire at the centre of the fraud.

Mr Javadekar suggested that there was a link between Mr Gandhi's visit to the exhibition and bankers being pressured to clear the loan.

He also attempted to distance the ruling BJP government from the banking fraud counted amongst India's biggest, arguing that the government's "alertness" had ensured that it was detected.

"It came to light after the NDA government tightened the banking norms", he said.

The Punjab National Bank had stumbled upon the mega fraud last month when a group of companies linked to Nirav Modi presented sought requested buyers' credit to pay overseas suppliers. Since they had no pre-arranged credit limit, the branch official asked the companies to put down the full amount as collateral so the bank could issue LOUs or guarantees. The PNB scanned through records and found no trace of any transactions when told that such guarantees had been issued in the past.