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>> The largest fraud in Indian banking history went unnoticed in this building. $1.8 billion of fake transactions from 2011 to 2017. Officials have linked the scandal to billionaire jeweler Nirav Modi. He's accused, along with others, of colluding with workers at Punjab National Bank to issue false advances for payments to overseas suppliers.
On Tuesday, Modi's lawyer had told Reuters, the jeweler denies the charges, and the wider scandal is still unraveling. On Monday, three arrests brought the total to five PNB staff detained over the case allegedly engineered by a loan manager and his subordinates. Reuters Cris Nadasin, New Delhi, reports, the case has exposed massive oversight failures in India's banks.
>> We spoke with several bank officials. Several Punjab national bank officials in Delhi and other places. And what we find is very startling. I mean they seem to suggest that all the banking operations in India particularly national banks or state banks, are very chaotic, lots of people, lots of customers and no one is really sure who is doing what.
>> The bank says it's still investigating how the fraud went on for so long. But from what sources tell Reuters the answer seems to be simple. No one was paying attention, pointing to a breakdown of standard banking process, shaking confidence in the country's financial sector.>> State banks dominate India's banking industry, right?
I mean 70% of India's banking assets are held in state banks. We have spoken to various experts and other people in the industry who say that sends out a very wrong message about India's banking industry. It's just hardly got largest economy and if your banks are operated like this, it's very limiting.
>> The case has stunned the financial markets. On Tuesday, it sent PNB shares tumbling for a fifth straight day since the bank disclosed the fraud. By then, the company had lost nearly a third of its market value.