Nirav Modi: A $4B banking fraud killed India's most glamorous luxury brand

Firestar Diamond was founded in 1999 by Nirav Modi. In 2010, Modi launched his eponymous luxury jewelry brand with a store in New Delhi. Within eight years, the Nirav Modi brand had boutiques in New York, London, Hong Kong, Beijing, Shanghai, Macau, Tokyo, and Dubai. The brand became known internationally — Kate Winslet wore Nirav Modi jewelry to the 2013 Oscars, and Naomi Watts and Priyanka Chopra also wore the brand. By 2018, Forbes estimated Modi's net worth at $1.8 billion.

On February 14, 2018, Punjab National Bank disclosed that fraudulent Letters of Undertaking had been used to obtain credit worth ₹28,000 crore ($4 billion) for Nirav Modi's overseas suppliers. The scam was orchestrated with the help of colluding PNB employees at the Brady House branch in Mumbai. The fraudulent LoUs had been issued over several years without any underlying trade, and the proceeds were diverted. PNB's actual loss was estimated at up to ₹11,000 crore ($1.5 billion).

The disclosure triggered an immediate collapse. Firestar Diamond Inc. filed for Chapter 11 bankruptcy protection in Manhattan in March 2018. Nirav Modi's UK-based company A. JAFFE was auctioned in May 2018. Indian authorities seized properties worth ₹523 crore and frozen bank accounts. Modi fled India in early 2018 and was arrested in London on March 19, 2019, where he has been fighting extradition ever since. His stores across the world gradually closed.

The brand's collapse became one of India's most notorious corporate frauds, second only to the Satyam scandal. The case exposed how India's state-owned banks could be defrauded through a combination of insider collusion and inadequate regulatory oversight. As of 2024, the Enforcement Directorate had recovered ₹1,052 crore from Modi's seized assets and returned the money to the banks.