The letter, written by a purported franchisee of Gitanjali, alleged: "This company is involved in siphoning out of Rs 1000s of crores of Indian public money through various subsidiary companies floated in India and fictitious companies overseas".
Numerous Indian media outlets have linked the scam to billionaire jeweler Nirav Modi.
The countrys second largest PSU bank has detected a Dollars 1.77 billion (about Rs 11,400 crore) scam where billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking (LoU) from a branch in Mumbai to secure overseas credit from other Indian lenders. The company said that it will take legal steps to have its Choksi's name omitted from the FIR.
While Nirav and his brother Nishal left India on January 1, his wife Ami, a U.S. citizen, and Choksi left on January 6, all before the CBI received a complaint from the PNB on January 29.
The fall dragged the National Stock Exchange's Nifty PSU bank index down 2 percent on Thursday, after it fell as much as 2.8 percent on Wednesday.
PNB has suspended 10 officers over the scam and referred the matter to the CBI for investigations. The fraud dates back to 2011, although it remains unclear the duration for which it lasted and how many guarantees were given. It followed PNB's complaint last month to India's Central Bureau of Investigation (CBI) that it had been defrauded of 2.8bn rupees.
The diamantaire is an Indian citizen but his brother Nishal and wife Ami are not Indian nationals. ICICI Bank and SBI were the major contributors to the index. On the basis of these fake LoUs, PNB staffers misused global money transfer facilities to take money from branches of Allahabad Bank and Axis Bank to sent it all to overseas accounts without leaving traces behind. "How can Nirav Modi and Mehul Choksi dupe the entire banking system through forged Letters of Understanding under the nose of Modi govt?" he said.
The PSU Banking Index fell 1.1% mainly due to PNB, Bank of Baroda, IDBI and Syndicate Bank.
Nine years later, Modi started his own company, Firestar Diamond Ltd., selling loose stones.
Indian banks, including PNB, have been stung by a surge in bad loans in the past four years, choking lending growth vital to accelerate the pace of expansion in Asia's third-largest economy. The Enforcement Directorate is continuing raids at various places associated with the well-known jewellery designer.
Prasad also clarified that Nirav Modi was not a part of the prime minister's delegation at the World Economic Forum. Despite all this, how was Nirav Modi permitted to escape the clutches of law and leave the country?
The news was a shock for the circles in which Modi moved. "He always wanted people to say they are "wearing Nirav Modi".
PNB MD & CEO Sunil Mehta said in today's press conference that they have the "capacity and capability" to come out of this situation. An LoU is a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers.