As the probe into the Punjab National Bank scam intensifies, the Central Bureau of Investigation has now arrested a senior official of the state-run bank. This is the highest profile bank official to be arrested so far and comes after a week after the scam was revealed.
Rajesh Jindal was the head of PNB’s Brady House branch in Mumbai between August 2009 and May 2011 as per the CBI, India’s federal police. After his arrest, the number of officials to have been taken into custody rose to six.
PNB in its complaint alleged that companies linked to Nirav Modi Mehul Choksi began receiving fraudulent letters of undertaking (LOUs) from its Brady House branch as far back as 2011.
Referring to Jindal, a CBI spokesman said, “During his tenure at PNB Brady House branch, the practice of issuance of LOUs without sanctioned limits to Nirav Modi group firms had started.”
Another CBI officer who wished to remain anonymous said that Jindal was now posted as a general manager and handles credit at the bank’s head office in New Delhi. Rajesh Jindal is currently in custody and is expected to appear in court on Wednesday.
The Brady House branch is at the center of the fraud involving Nirav Modi, whose lawyer has denied all the accusations made against his client. Mehul Choksi’s firm Geentanjali has said it has nothing to do with the case.
Late on Tuesday, the CBI said it had also arrested five officials from the groups of Nirav Modi and Mehul Choksi. Both the groups as well as the Punjab National Bank have not commented on the arrests so far.
Shares in PNB, which have lost more than a quarter of their market value since the scandal became public, were up 1 percent in early trading on Wednesday.