The Nirav Modi Fraud

How jeweller Nirav Modi and associates used fraudulent bank guarantees from Punjab National Bank to raise billions of dollars, and what it revealed about bank controls.

In January 2018, Punjab National Bank (PNB) revealed a massive fraud.

The scheme

Jeweller Nirav Modi and his uncle Mehul Choksi’s companies obtained letters of undertaking (LoUs) from a PNB branch in Mumbai.
LoUs are guarantees that let firms borrow from other banks abroad.
Some PNB employees issued them without proper records or collateral, using the SWIFT messaging system not linked to the bank’s core system.

Scale

The fraud was around 13,000 to 14,000 crore rupees (about 2 billion dollars), one of India’s largest bank frauds.

Aftermath

Nirav Modi fled India and was arrested in London in 2019; UK courts approved his extradition, though it had not yet happened by 2025.
Mehul Choksi was arrested in Belgium in 2025.
The Fugitive Economic Offenders Act, 2018 was passed to seize assets of fugitives.

Lessons

Integrating SWIFT with banks’ core systems.
Stronger internal controls.

Effect on the industry

Banks became cautious about lending to jewellers.

The unrecorded guarantee

A bank employee sends a SWIFT message guaranteeing a loan abroad, but the guarantee never appears in the bank's own records.

Thinking bank frauds need hacking

This fraud exploited weak internal controls.

Key takeaways

PNB revealed the fraud in January 2018.
Fraudulent LoUs raised around 13,000 to 14,000 crore rupees.
Nirav Modi was arrested in London; Choksi in Belgium in 2025.
The Fugitive Economic Offenders Act followed in 2018.