Bank of India (BoI) on Monday filed a lawsuit against the billionaire jeweller Nirav Modi in a Hong Kong court, to recover money he received on the basis of illegally-secured letters of undertaking, or LoUs.
BoI's writ was filed against Modi and four of his companies, including Firestar Diamonds and Firestar Diamonds International.
The lender hopes to recover debt to the tune of $6.25 million, and is the second bank - after Punjab National Bank (PNB) - to file a recovery lawsuit against Modi in Hong Kong since the third week of April. PNB moved a recovery writ for an amount over $5 million.
It was PNB, India's second largest state lender, which disclosed in February that companies owned by Modi and his uncle Mehul Choksi defrauded it by raising credit from overseas branches of other Indian banks, using illegal guarantees issued by staff at one of its Mumbai branches over several years.
India has requested authorities in Hong Kong to arrest Modi. In April, General (Retd) VK Singh, the junior minister for external affairs, informed the Rajya Sabha that the MEA "has sought the provisional arrest of Nirav Deepak Modi". He said the request was made on March 23.
'PURSUING THE FRAUDSTER IN ANY CORNER OF THE WORLD'
Top officials at Bank of india say the suit was filed after the government's nod to exploring all legal options to recover dues, and set an example by "pursuing the fraudster in any corner of the world".
To avoid the reoccurrence of bank frauds such as the one detected by PNB, most public sector banks have started tightening the noose around wilful defaulters who are viewed as 'high-risk' with regard to the possibility of their fleeing the country to evade recovery.
The banks have also released a list of borrowers who've been declared as wilful defaulters, and action has been initiated against them.
The passports of such borrowers are being impounded to ensure they don't leave India to escape paying their dues.
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