Billionaire diamond jeweller Nirav Modi | Photo Credit: Indiatimes

Mumbai/New Delhi: Soon after the alleged discovery of a $1.8 billion bank fraud at state-owned Punjab National Bank (PNB), alleged scam-accused Nirav Modi, who is believed to be in Switzerland, on Thursday reportedly offered to pay back Rs 5,000 crore to banks in an attempt to settle the dispute. Sources said the billionaire diamond jeweller may have left the country almost three months ago.

PNB fraud case: Gitanjali Gems tanks 19%, other jewellery stocks under pressure

While the Home Ministry said they do not have information on Modi's alleged escape to Switzerland, the Enforcement Directorate has confirmed that the diamond merchant has fled the country. As the authorities continue to investigate the bank fraud, other banks such as Axis Bank are also coming out into the open, saying that they too had lent money to Nirav Modi, as per the Letter of Undertaking (LoU) agreements with PNB. A total of six banks are supposedly involved in the mega scam, according to sources close to the matter.

It may be noted that several of the Nirav Modi's properties were raided by the Enforcement Directorate on Thursday, a day after the development came to the fore. While the agency was initially investigating the company's involvement in a Rs 280 crore fraud, PNB's announcement on Wednesday makes it clear that the fraud is worth Rs 11,400 crore or $1.8 billion.

In an attempt to warn other banks in the country, PNB has also issued a letter of caution to other banks to avoid "similar loots". At least 10 employees, including junior officials handling the Swift - a financial messaging service to move millions of dollars across borders - are under the scanner for involvement in the mega scam.

PNB Fraud Case: ED raids Nirav Modi's Mumbai office

Not just Nirav Modi, but several of his family members - brother, wife, and others - are allegedly involved in the bank fraud. Fresh reports suggest that his wife and other family members are currently in the US.

On Thursday, alarm bells were again heard at India's second largest state-owned Punjab National Bank (PNB), after the discovery of a 1.77 billion dollar (Rs 11,400 crore) fraud at a single Mumbai branch. It has been hinted by experts that the fraud could have an adverse effect on several other banks, and regulations could become stricter.

Saying that the fraud benefited a few select account holders, PNB yesterday named three diamond firms -- Diamonds R Us, Solar Exports, and Stellar Diamonds. It may be noted that Nirav Modi and his family members are partners in all the aforementioned companies.

Who is Nirav Modi

A day after the massive fraud was discovered, stocks of PNB took a massive hit. Several jewellery companies also bore the brunt of the massive $1.8 billion bank fraud. Jewellery stocks came under pressure on Thursday after jewellery companies like Gitanjali, Ginni, Nakshatra came under the scanner of investigative agencies following PNB's declaration of Rs 11,400 crore fraud committed allegedly by Nirav Modi.

"Four big jewellers -- Gitanjali, Ginni, Nakshatra and Nirav Modi -- are under the scanner. The CBI and Enforcement Directorate is looking at their arrangements with various banks and end use of money," a senior official of a public sector bank told PTI on condition of anonymity.

Priyanka Chopra sues Nirav Modi for non-payment of dues, Sidharth Malhotra exploring legal options too

Shares of Gitanjali Gems tumbled as much as 19 per cent in morning trade to an intraday low of Rs 37.25 as traders fear alleged involvement of Mehul Choksi, chairman and MD of Gitanjali Group in the PNB fraud.

Last week, PNB had lodged an FIR with the CBI stating that fraudulent LoUs worth Rs 280.7 crore was first issued on January 16. In the complaint, PNB had named three diamond firms -- Diamonds R US, Solar Exports, and Stellar Diamonds -- saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers.

The bank sought 100 per cent cash margins for issuing LoUs for raising buyers' credit, which was contested by the firms, saying they had availed of the facility from as early as 2010.

Based on these transactions, done by Nirav Modi's brother Nishal, wife Ami and Mehul Chinubhai Choksi, other banks appear to have advanced money to these customers abroad, the PTI report said.