Investigations revealed that Modi and Choksi took additional letters of undertaking (LoUs) to fund the LoUs they had taken since 2011 and the trail now goes back seven years to when it started.

The CBI on Monday evening arrested three senior officers of PNB for their involvement in the Rs 11,400 crore fraud involving Nirav Modi and his uncle Mehul Choksi.

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The three have been identified as Becchu Tiwari, chief manager, Forex who was a direct supervisor of earlier arrested accused deputy manager Gokulnath Shetty and had full knowledge of the fraud happening in the the Brady house branch at PNB.

The second accused is Yashwant Joshi, alias Abhay Joshi, who is a scale II manager and was responsible for updating swift and core banking solutions (CBS) at the bank and took no action against Shetty while the third arrested accused has been identified as Prafull Sawant scale I officer who was hand in glove with Shetty and was responsible for checking swift messages and preparing reports.

As of now a total of six accused have been arrested in the case and many more arrests are likely to happen.

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The primary investigation by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) is underway to determine the actual

amount lost by banks in the alleged fraud committed by Modi and Choksi.

Investigations revealed that Modi and Choksi took additional letters of undertaking (LoUs) to fund the LoUs they had taken since 2011 and the trail now goes back seven years to when it started.

As of now the case has been registered only under the LoUs taken in 2017 which number around 151, the last of which was issued on May 2 last year.

The total LoUs amount touches Rs 3,312 crores in 2017. Sources from PNB said that all these LoUs are unpaid ones.

The LOUs issued were to Allahabad bank's Hong Kong branch, Axis Bank's Hong Kong branch, SBI's Mauritius and Frankfurt branches, Bank of India's Antwerp branch and Canara bank's Bahrain branch.

PNB has already received claims from Allahabad and Axis banks' Hong Kong branches and are also expecting claims from the remaining banks mentioned as and when the LoUs expire.

PNB has already refused to pay Allahabad and Axis Banks and it is likely that they will refuse other banks too and finally RBI will have to take a call on this.

ED, CBI and further investigations into PNB's audit reports have found that auditors, concurrent audits by the bank and the LOUs were never entered into the bank's CBS.

"When the CBS doesn't have any record, it won't appear in the annual balance sheets and this is the reason the fraud went on for so long without being detected," said former central statutory auditor for PNB, BM Agarwal from Borkar and Muzumdar Associates.

Sources also told India Today that CBI questioned PNB officials as to why no one noticed the transactions in PNB's nostro account. The bank told CBI that the system only checks if the debit and credit transactions match or not and it does not check how these transactions have matched. The system is alerted only if there is any outstanding in the Nostro account.

As of now, CBI has questioned around 13 officials from PNB of which one is general manager Rajesh Jindal who was in charge of PNB's Brady House branch in 2011.

Both ED and CBI suspect the amount that has been defrauded could be much more than what has come to light recently.

A total of 500 LoUs were issued for the accused duo from PNBs Brady House branch and efforts are being taken to trace the first beneficiaries of the LoUs issued for Modi and Choksi.

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