Interpol has issued a red notice for the arrest of Indian billionaire jeweller Nirav Modi, who is at the centre of an alleged $2bn bank fraud.

India’s Central Bureau of Investigation is probing a multibillion-dollar scam, allegedly involving Modi, and several Indian courts have issued arrest warrants over his failure to appear before them.

Interpol issued a red notice for Modi on Tuesday, a call to international police forces when a suspect is wanted for prosecution or to serve a sentence based on an arrest warrant or court decision.

Earlier this year, India’s state-run Punjab National Bank announced that two jewellery groups headed by Modi and his uncle Mehul Choksi had defrauded it of about $2.2bn.

Modi is accused of raising credit from overseas branches of other Indian banks using bank guarantees issued by rogue PNB staff at a Mumbai branch over several years.

Indian authorities allege he diverted these large sums of loaned money illegally to invest in foreign-based companies.

“Essentially what he did was he took funds from the banking system without providing any security. When he was unable to pay back, the bank had no security to get its dues back,” Hemindra Hazari, an independent banking analyst, told Al Jazeera.

“There was a complete collapse of internal banking controls which defies belief. I suspect there are many more senior people involved than what is publicly known today,” he adds.

A request for comment from Nirav Modi’s firm Firestar International remains unanswered.

Jeweller to the stars

Nirav Modi, a third-generation diamond trader who has dressed stars including actors Kate Winslet, Dakota Johnson and Priyanka Chopra, was part of a CEOs meeting with Indian Prime Minister Narendra Modi on January 23 on the sidelines of the World Economic Forum in Davos.

Jeweller Modi is worth $1.73bn according to Forbes, placing him 85th on India’s rich list.

The incident renews focus on India’s state-run lenders’ bad-loan crisis. The proportion of non-performing loans – loans on which the borrower is not making interest payments or repaying any principal – in India has surged to be among the highest in the world.

India’s 21 state banks majority-owned by the government hold close to 90 percent of the bad loans.

India’s interim finance minister Piyush Goyal announced on Monday that among the steps taken by the government to clean up the banking sector is the creation of an asset management company to resolve bad loans above 5bn rupees ($73m).

“That’s not a credible plan. This plan of creating an asset reconstruction company has already been tried before. The main point is – how do you recover bad loans?” banking expert Hazari said.

“Why was this Interpol notice not given earlier? He was travelling on a revoked passport. That’s inexplicable,” he adds.

Not an isolated case

Modi’s escape had caused a massive public outcry in India. But his is not an isolated case.

India is also seeking the extradition of tycoon Vijay Mallya, who stands accused of fraudulently palming off losses from his now defunct Kingfisher Airlines onto banks by taking out loans which remain unpaid.

Indian banks want to recover a total of about $1.4bn that Indian authorities say Mallya’s firm Kingfisher owes.

He is in Britain pending extradition proceedings initiated by India.

Nirav Modi’s uncle Mehul Choksi, owner of Gitanjali Gems, has also fled the country while facing charges of banking fraud.

A Delhi-based firm, Dwarka Das Seth International, which reportedly cheated a separate bank with the help of some of its officials, is also being investigated by India’s federal police while its promoters have allegedly fled the country.