How Mehul Choksi Defrauded PNB of Rs 14000 Crore: The Full Story

Mehul Choksi, once a celebrated diamantaire and head of Gitanjali Gems, orchestrated one of India’s largest banking frauds, defrauding Punjab National Bank (PNB) of Rs 14,000 crore through a complex web of deceit. From 2011 to 2018, Choksi, in collusion with rogue bank officials, manipulated Letters of Undertaking (LoUs) to siphon off funds, leaving a trail of financial devastation that shook the nation’s banking sector.

Edited By: Madhulika Rai

Last Updated : 14 April 2025, 11:37 AM IST

Mehul Choksi (File)

Mehul Choksi is a name that was once counted among the biggest jewelers of India, today he is known as a fugitive economic offender. He, along with his nephew Nirav Modi, defrauded Punjab National Bank (PNB) of about Rs 14,000 crore. This is considered the biggest scam in Indian banking history. This story reflects power, corruption and the weaknesses of the system.

How did the scam start?
Mehul Choksi's company Gitanjali Gems Limited and Nirav Modi's company Firestar Diamond often needed foreign currency to import and export raw diamonds from abroad. For this, loans or Letters of Undertaking (LoUs) are taken from the bank, which is a kind of guarantee that the Indian bank will pay the money to the foreign bank.

Some corrupt bank officials of PNB's Brady House branch in Mumbai ignored the rules and issued LoUs repeatedly to Mehul Choksi and Nirav Modi's companies without any proper documentation. These LoUs were sent to foreign banks through the SWIFT network, but they were never recorded in PNB's core banking system, so no one got a clue.

How did the amount of scam increase?
Since the LoUs were not being repaid every time, new LoUs were being issued to repay the old loans. Like a Ponzi scheme. This process continued for several years and gradually the amount reached around ₹ 14,000 crores. All this came to light when in 2018 a new bank officer refused to issue the LoUs and an investigation into the matter began.

Absconding and change of citizenship
Even before the scam was exposed, Mehul Choksi fled from India and took citizenship of Antigua and Barbuda. Nirav Modi also took refuge in London. The Indian government started investigation against both of them through CBI and ED in cases of money laundering, fraud and corruption. Choksi's properties were confiscated and he was declared a fugitive economic offender.

Arrest and legal battle
In 2021, Mehul Choksi was caught in Dominica when he was allegedly trying to flee to Cuba. He claimed that he was kidnapped and forcibly brought to Dominica. This led to an international legal dispute. The Indian government is still trying to extradite him. Now Mehul Choksi has been detained in Belgium following an extradition request from Indian investigative agencies.

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