The Gem and Jewellery Export Promotion Council (JEPC) has condemned the recent episode of alleged siphoning of funds by the companies related billionaires Nirav Modi and Mehul Choksi. The body has also demanded a through probe in the matter. Raising concern, the industry representatives said they are against any sort of unlawful or illegal actions by any individual, trade or otherwise. "When thousands of exporters undertake business lawfully, adhering to all norms and practices, prescribed very diligently, incidents of this kind can only take place due to non-adherence of norms," they said.
The council, however, assured it would not have any contagion effect on the gems and jewellery export industry. In a press release, the council said going by the prevalent compliance system in place, chances of such vast irregularity without any detection across several financial periods is surprising. "This only demonstrates lacunae in internal control system and failure or lack of fraud protection measures within the PSU," it said.
The council slammed the PNB for clearing LoUs to Nirav Modi and Mehul Choksi's companies without following proper norms. "The GJEPC is struggling to garner financing to the gem and jewellery exporters, especially the SME exporters. Such kinds of clear advances (LoUs) being provided by a bank without any safeguards speak volumes of irregularities, which need to be investigated," said the council, adding that it was ready to assist all investigating agencies in all possible ways.
The gems and jewellery sector contributes to 7 per cent of the country's GDP, 15 per cent of India's merchandise exports, and employs more than 4.5 million people of the country.
It is important to know that bank finance to trade is guided by stringent norms of the RBI and the centre government with internal audits on quarterly and annual bases. Every Swift code (an international bank code that identifies banks worldwide) transaction by a bank is intimated to Nostro (an account that a bank holds in a foreign currency) and International Division (treasury) of the bank. Besides, the RBI had launched Export Data Processing and Monitoring System (EDPMS) in March 2014 to monitor payments against Export/Import Bill.
The country's second largest public sector bank, PNB, on February 14 said it detected a "fraudulent and unauthorised" transaction worth Rs 11,400 crore at its Brady House branch in Mumbai. The PNB complaint to the CBI stated diamantaire Nirav Modi's company had siphoned off Rs 11,400 crore through 'fraudulent' means.