Mehul Choksi Arrested in Belgium: The Rs 13,850-Crore PNB Fraud Explained
Mehul Choksi, once a prominent figure in India's diamond industry and the head of Gitanjali Gems, has been arrested in Belgium, marking a significant development in one of India's biggest banking frauds—the Rs 13,850 crore Punjab National Bank (PNB) scam.
The PNB Scam: How It Unfolded
The scandal, involving Choksi and his nephew Nirav Modi, was uncovered in 2018 and is considered one of the largest banking frauds in India’s history. Choksi and Modi used fraudulent Letters of Undertaking (LoUs) to secure loans from foreign banks, which they never repaid. These LoUs, typically issued by banks to guarantee credit, were used to mislead banks, resulting in a massive financial loss. The scheme involved PNB's Mumbai branch and continued undetected for years due to internal complicity and procedural lapses.
Choksi fled India in 2018, first traveling to the United States before obtaining citizenship in Antigua and Barbuda in 2017. Since then, Indian authorities have sought his extradition to face charges related to the fraud.
The Arrest and Legal Pursuit
On April 12, 2025, Choksi was arrested by Belgian authorities after a request from Indian agencies, including the CBI and Enforcement Directorate. He was detained while receiving medical treatment in Belgium. The arrest marks a crucial step in the ongoing effort to bring him to trial for his involvement in the scam.
The Financial Impact of the Fraud
The total value of the fraud amounted to Rs 13,850 crore, with the Gitanjali Group under Choksi’s leadership responsible for Rs 6,097 crore, while Modi’s entities accounted for Rs 6,498 crore. The remaining amount includes interest and other charges.
Investigative Efforts and Asset Recovery
Following the scam's exposure, the Enforcement Directorate froze assets, raided offices, and seized properties linked to Choksi’s companies. In September 2024, a Mumbai court authorized the sale of assets worth Rs 2,565 crore, which were connected to the Gitanjali Group. The proceeds from these auctions are now held in fixed deposits by the banks involved.
Mehul Choksi’s wife, Priti, has also been implicated in the scandal. Reports suggest her involvement in setting up offshore shell companies that helped launder the ill-gotten funds. These companies were linked to properties worth over Rs 22.5 crore in Dubai, which were later seized by Indian authorities.
With Choksi’s arrest, authorities hope to bring an end to the long-running saga of the PNB fraud. However, the legal battle is expected to be complex, and it remains to be seen whether Choksi will be extradited to India to stand trial.
This case continues to underscore the need for tighter financial regulations and greater accountability within India’s banking sector.
