Fugitive diamond trader Mehul Choksi has reportedly been arrested in Belgium following an extradition request from Indian investigative agencies in connection with the Rs 13,000 crore Punjab National Bank (PNB) loan fraud case.
The arrest occurred on Saturday after the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) jointly submitted the request, including two open-ended arrest warrants issued by a special Mumbai court in 2018 and 2021, according to a PTI report.
Choksi is the second key accused in the PNB fraud case after his nephew Nirav Modi, who is also facing extradition proceedings in the UK.
Choksi had been residing in Antigua since fleeing India in 2018 but traveled to Belgium last year, citing medical treatment. Indian authorities had reportedly been tracking his movements since then.
Interpol’s Red Notice against Choksi was removed last year, prompting Indian agencies to pursue his extradition through formal channels. Officials said extradition procedures are currently underway, though Choksi may seek bail on medical grounds.
What Is Mehul Choksi Accused Of?
In 2018, the CBI and ED booked Choksi, his nephew Nirav Modi, their associates, and several bank officials for their alleged roles in one of India’s biggest banking scams. The fraud was uncovered at PNB’s Brady House branch in Mumbai.
Investigations allege that Choksi, through his company Gitanjali Gems, fraudulently obtained Letters of Undertaking (LoUs) and Foreign Letters of Credit (FLCs) in collusion with corrupt bank officials—bypassing due process and causing massive financial losses.
Between March and April 2017, PNB officials reportedly issued 165 LoUs and 58 FLCs without approved credit limits or cash margins. No entries were made in the bank’s central system to conceal the transactions.
LoUs are bank guarantees to foreign banks, making the issuing bank liable if the borrower defaults. Based on these instruments, several international branches of Indian banks—like SBI (Mauritius and Frankfurt), Allahabad Bank (Hong Kong), Axis Bank (Hong Kong), Bank of India (Antwerp), and Canara Bank (Manama)—extended credit.
As Choksi’s firms defaulted, PNB had to repay Rs 6,344.97 crore, including overdue interest, to the foreign banks, according to the CBI's supplementary chargesheet.
The CBI has filed two chargesheets against Choksi, while the ED has submitted three prosecution complaints.
How Choksi Fled India
The fraud was detected in January 2018 during PNB’s internal audit, which revealed irregular SWIFT transfers. Days before the fraud came to light, on January 7, Choksi fled India for Antigua and Barbuda. On January 15, he reportedly obtained citizenship of Antigua under its Citizenship by Investment Program.
Initially, Choksi’s lawyers claimed he had left for a medical check-up. Later, they maintained his innocence and even alleged he was kidnapped by “agents of the Indian state.”
Recovery from Mehul Choksi
A 2020 RTI response to activist Jeetendra Ghadge revealed that Choksi and Nirav Modi together owe Rs 15,423 crore to Indian public sector banks—Rs 7,409.07 crore by Modi and Rs 8,014.32 crore by Choksi.
In 2024, a Mumbai PMLA court authorized the monetization of assets worth Rs 2,565.9 crore seized by the ED in connection with the case. These include domestic and overseas properties, vehicles, jewelry, and bank accounts.
Gitanjali Gems, Choksi’s company, is currently under liquidation, facing liabilities exceeding Rs 39,024 crore, including financial dues of over Rs 25,112 crore. The National Company Law Tribunal (NCLT) has appointed Santanu T. Ray as the liquidator.
In February, the Mumbai bankruptcy court allowed the liquidator to exclude 260 days from the liquidation process, citing delays due to ongoing PMLA investigations.
