Gitanjali Gems' empire of 4,000 stores was built on a $1.8B bank fraud

Gitanjali Gems was one of India's biggest jewelry companies — a diamond and gold retailer with about 4,000 stores across the country, and a listed company whose promoter Mehul Choksi moved in the highest business circles. The scale concealed a problem: much of the empire's financing, Indian authorities later alleged, was fraud.

In 2018, Punjab National Bank disclosed that fraudulent letters of undertaking had been used to obtain credit for overseas suppliers of jewels. India's Enforcement Directorate accused Choksi and his nephew Nirav Modi of colluding with employees of PNB's Brady House branch in Mumbai to obtain fraudulent advances, which were then allegedly diverted and laundered. The scam totaled nearly $1.8 billion — one of the largest banking frauds in Indian history.

Gitanjali Gems' business collapsed as the case broke; the company was wound up through insolvency proceedings. In February 2020, the Securities and Exchange Board of India penalised Gitanjali Gems and Choksi ₹5 crore for failing to disclose material information about the fraud to stock exchanges. Choksi left India in 2018 and has fought extradition ever since; the allegations against him remain before the courts.