Bank of India files lawsuit against Nirav Modi in Hong Kong court for recovery of $6.25 million

State-owned Bank of India on Monday filed a lawsuit against fugitive fraudster Nirav Modi in a Hong Kong court for the recovery of the money he had drawn from the bank on the basis of illegally secured Letters of Undertaking. The public sector bank moved a court in Hong Kong for the recovery of debt to the tune of $6.25 million. The Bank of India (BoI) is the second lender bank to file a recovery law suit in the Hong Kong court since third week of April.

Before BoI, the Punjab National Bank (PNB) had moved a recovery writ in a Hong Kong court against Nirav Modi for an amount over $5 million. The writ by Bank of India has been filed against Nirav Modi, and four of his companies, including Firestar Diamonds and Firestar Diamonds International. Nirav Modi, accused of defrauding PNB of Rs 13,700 crore by using over 1,200 illegally secured LoUs, is at large since February.

The bank moved the court in Hong Kong after the confirmation from law enforcement agencies in India that Nirav modi had fled Hong Kong long ago.

Earlier, India Today's investigations in Hong Kong had revealed the fugitive diamond merchant has already started a business in the foreign country.

Meanwhile, top officials of Bank of India confirmed the suit was filed after the central government's nod to explore all legal options to recover the dues and set an example by "pursuing the fraudster in any corner of the world".

India has already submitted a request to the Hong Kong authorities to arrest Nirav Modi. In April, Minister of State in the Ministry of External Affairs General (retd) VK Singh informed the Rajya Sabha that the ministry "has sought a provisional arrest of Nirav Deepak Modi". He said the request was made on March 23.

To avoid reoccurrence of such bank frauds, most public sector banks have started tightening the noose around willful defaulters who are viewed as 'high risk' in regards to their possibility of fleeing the country to evade recovery. The banks have also released a list of borrowers who have been declared as willful defaulters. Furthermore, action has been initiated against willful defaulters and the passports of such borrowers are being impounded to ensure they don't flee the country.

In March, the centre had announced a new rule against economic offenders attempting to flee the country, saying that banks will have to collect passport details of customers who seek loans above Rs 50 crore.