Former Punjab National Bank (PNB) deputy manager Gokulnath Shetty is refusing to cooperate with the Indian authorities investigating his role in the US$2 billion letter of credit (L/C) and letter of undertaking (LoU) fraud at the bank, allegedly perpetrated by diamond merchants, Nirav Modi and his uncle, Mehul Choksi.

Shetty has admitted to the Enforcement Directorate (ED) that he issued the first LoUs to Modi in 2010 and very many more after that, but he does not accept the Central Bureau of Investigation's (CBI's) accusation that he gained financially from his actions.

Lie-detector refused

The CBI has requested that Shetty undergoes lie-detector and drug tests in order to establish whether or not he gained financially from the PNB fraud.

But the former deputy bank manager has refused the CBI's request for polygraph and drug tests and maintains he received no pecuniary benefits in return for fraudulent L/C and LoU approvals.


Shetty argues that the CBI is merely making an assumption that he benefitted financially in his dealings with Modi and Choksi.

The CBI suspects that while Shetty was in the foreign exchange department of the PNB's branch at Brady House, Mumbai, between April 2010 and May 2017 he participated in the diamond merchants' fraud operations.


Shetty fraudulently issued 143 LoUs and enhanced the value of foreign L/Cs in contravention of PNB's procedures according to the CBI.

The former PNB manager however is critical of the CBI, saying they have only investigated six LoUs so far and 137 LoU's have yet to be probed.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.