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Mainstream, VOL LVI No 11 New Delhi March 3, 2018

Nirav Modi Fraud: Tip of the Iceberg

Monday 5 March 2018, by Arup Kumar Sen


The world of finance is a world of mystery. The common man is not in a position to understand its intricacies. In the age of domination of finance capital under neo-liberalism, financial scams constitute the new face of plunder. The latest addition to the list of financial scams in India is the one engineered by Nirav Modi.

The main bank involved in the Nirav Modi fraud case, Punjab National Bank (PNB), reported a steady slide in its profitability over four of the last five years, and the government commensurately stepped up capital support to the state-owned lender by over ten times from Rs 500 crores in 2013-14 to Rs 5473 crores in the current financial year.

The documents seized from the premises connected to the jewellery trader and fraud star, Nirav Modi, show that in addition to his alleged Rs 11,000-crore fraud in PNB, Rs 3000-crore money laundering from 17 banks took place. We do not know what will be the final figure of the fraud. But, there is no doubt in our mind about the would-be victims of this fraud—the taxpaying citizens of India. Professor Ila Patnaik (The Indian Express, February 17) has raised a fundamental question in this connection and cited evidence of leakage of enormous amount of public money in recent years. To put it in her own words: “How many times in the past have taxpayers paid the PNB and other public sector banks that were falling short? CAG Report No. 28 of 2017...says that GOI, as the majority shareholder, has infused capital of Rs 1,18,724 crores from 2008-09 to 2016-17 in PSBs for meeting their capital adequacy requirements. The government has announced that it is infusing another Rs 2.11 lakh crores into PSU banks. At the same time, bad loans in the banking sector are above 10 per cent of outstanding loans. According to the RBI’s Financial Stability Report, while NPAs are rising for both public and private sector banks, those for public sector banks could rise to as much as 14.6 per cent by March 2018.”

In justifying his demonetisation move, the Prime Minister, Narendra Modi, stated (November 8, 2016): “This step will strengthen the hands of the common man in the fight against corruption, black money and fake currency.” The Nirav Modi fraud case puts a big question-mark to Narendra Modi’s anti-corruption manifesto.

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