The CBI has already registered two FIRs - one on January 31 and another in March against Nirav Modi, his relative Mehul Choksi of Gitanjali Gems and others for allegedly defrauding the PNB of about Rs 11,400 crore. The arrest will be based on local laws and mutual judicial assistance agreements.
The massive Rs 12,700 crore scam of Punjab National Bank by jeweller Nirav Modi raised several questions on how a scam of such a large scale could have taken place without detection. While India has previously made an extradition treaty with Hong Kong, there has been no such agreement done with China.
According to the Post, Modi opened his first diamond boutique in Hong Kong in 2015 at Elements shopping mall in Kowloon.
This fraud on PNB was allegedly perpetrated by two jeweller groups that raised loans from overseas branches of Indian banks using almost $2 billion of fraudulent guarantees issued by some rogue PNB staffers over a period of years.
The CBI special court in Mumbai has approved the application for issue of a non-bailable warrant against Choksi and Modi after the duo failed to respond to the agency's three summons in the last two months. "If money has gone from our system and parked in that company, our bank's views should be heard before deciding about insolvency petition", PNB Managing Director Sunil Mehta told PTI in an interview.
China has said on Monday that Hong Kong can agree to India's request for arresting fugitive businessman Nirav Modi, who has been reportedly in Hong Kong.
Both Modi and Choksi are accused of making fraudulent transactions worth over Rs 13,000 crore through fake letters of undertaking (LoUs) issued on behalf of PNB bank.
The CVC had also advised the Reserve Bank of India as well as the department of financial services (DFS), which comes under the finance ministry, to issue an advisory to banks to ensure control over forex remittances purportedly for the goal of imports and that banks should have specific standard operating procedures (SOPs).
Hong Kong has its own separate independent system where China can have a say only in defence and external affairs.