PNB scam: Major setback for fugitive Nirav Modi as UK High Court orders his extradition to India

The United Kingdom High Court on Wednesday (November 9) ordered the extradition of Nirav Modi to India as the diamond merchant lost his appeal on mental health grounds. He is set to face fraud charges in the Punjab National Bank (PNB) scam.

The ruling noted that his "risk of suicide" is not such that it would be either "unjust or oppressive" to extradite him to India to face charges.

The ruling stated: "Pulling these various strands together and weighing them in the balance so as to reach an overall evaluative judgment on the question raised by Section 91, we are far from satisfied that Mr Modi's mental condition and the risk of suicide are such that it would be either unjust or oppressive to extradite him."

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"It may be that the main benefit of the appeal has been to obtain the extensive further [Indian government] assurances that we have identified in the course of this judgment, which render the position clear to Mr Modi's advantage and the District Judge's decision supportable," it added.

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PNB scam is India's biggest banking scam allegedly perpetrated by Nirav Modi and Mehul Choksi with a combined loss of over $2 billion.

An investigation into the scam revealed that Nirav Modi and his uncle Mehul Choksi are wanted for allegedly siphoning off public money from the state-run PNB, using the Letters of Undertaking.

Probes have also revealed that messages for fraudulent LoUs were sent to overseas banks by misusing Society for Worldwide Interbank Financial Telecommunications (SWIFT).

For the unversed, SWIFT is an international messaging system for banking, and without making their subsequent entries in PNB's internal software 'Finacle', thus bypassing any scrutiny of such funds in the bank.

What is an LoU?

An LoU is a guarantee given by an issuing bank to Indian banks having branches abroad to grant short-term credit to the applicant. In case of default, the bank issuing the LoU has to pay the liability to the credit-giving bank along with accruing interest.

In Nirav Modi's case, his companies along with Choksi's took loans from banks abroad on the basis of these LoUs but did not repay them, thus transferring the liability to PNB.

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