Gitanjali group of companies is promoted by Nirav Modi's uncle Mehul Choksi.
The CBI is examining balance sheets of 18 India-based subsidiaries of the Gitanjali group of companies promoted by Mehul Choksi to understand the money trail of funds taken from various banks on the basis of Rs 11,384 crore of guarantees furnished by the Punjab National Banks, officials said in New Delhi today.
The CBI officials said the agency is continuing the questioning of arrested bank officials - Gokulnath Shetty (retired) and Manoj Kharat and a Nirav Modi company's signatory - besides that of other officials of the PNB, to find out the money trail and depth of the alleged scam, spread across thousand of documents and digital records.
They said the agency is also analysing records recovered from a huge server seized during searches after registration of the FIR against Mehul Choksi.
When asked about possible quid pro quo involved in the alleged scam perpetrated in collusion with billionaire diamond merchants Choksi and his nephew Nirav Modi and Punjab National Bank officials, they said they are still looking into it and it cannot be clearly said if there were regular payments or not.
"Right now the focus is to understand the depth of the scam, the movement of funds and role of other senior officials," an official said.
One of the biggest financial scams of the country surfaced when companies of Nirav Modi and Mehul Choksi approached the PNB's Brady road branch, Mumbai, in January this year seeking Letter of Understanding (LoU) for payments to suppliers.
The official handling the case sought 100 per cent cash guarantee before any such letters could be issued to which the company officials said no such guarantee was sought in the past.
The official checked the records which did not show such Letters of Understanding (LoU) to Nirav Modi or Choksi's company which led to suspicion.
It is alleged that Shetty, for the last seven years, was bypassing core banking system of the bank and issuing LoUs fraudulently.
The LoU is a guarantee which is given by an issuing bank to Indian banks having branches abroad to grant a short-term credit to the applicant. In case of default, the bank issuing the LoU has to pay the liability to credit giving bank along with accruing interest.
Shetty and Kharat sent messages of these LoUs using an international messaging system for banking systems called SWIFT (Society for Worldwide Interbank Financial Telecommunication) which is used to pass instructions among banks globally to transfer funds.
It is estimated that millions of messages are sent daily using the SWIFT technology globally wherein every member bank can send or receive messages of financial transactions to another bank worldwide.
The PNB officials sent these messages to Indian banks - Canara Bank, State Bank of India, Bank of India, Axis Bank, Allahabad bank - located in Antwerp, Hong Kong, Bahrain, Mauritius, Frankfurt without making entries in the banking software about the LoUs.
These LoUs and Letters of Credits (LC) worth Rs 11,384 crore were getting renewed or issued afresh during last six years without coming in the notice of the bank. The Indian banks abroad did not mind as their money was safe (under guarantee from the PNB) and increasing because of accruing interest.
The party was spoiled in January this year when first renewal arose after the retirement of Shetty, the officials said. An alarmed bank dug out all such LoUs and LCs showing a mammoth liability towards other banks.
The conniving officer also issued Foreign Letters of Credit by entering a smaller amount in trade finance module of Core Banking Solutions (CBS) system and generating the reference number and a SWIFT message was sent for the amount, the bank alleged.
It said subsequently without making any changes in the module of the CBS, the conniving officer sent modified SWIFT message for enhanced amount under the same reference to the beneficiary bank.
Upon receiving the messages from the PNB under SWIFT, the banks abroad transferred these amounts into NOSTRO account of the PNB with them.
The Nostro account means account that a bank holds in a foreign currency in another bank to enable foreign trade by its clients.