Nirav Modi's brother Nehal Modi arrested in US after CBI, ED make extradition request

New Delhi/Washington, July 5, 2025: In a significant breakthrough in the multi-billion dollar Punjab National Bank (PNB) fraud case, Nehal Modi, brother of fugitive diamond tycoon Nirav Modi, has been arrested in the United States following a formal extradition request by Indian enforcement agencies — the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). The arrest marks a pivotal step in India’s ongoing efforts to bring the key players of the $2 billion fraud to justice.

Background: PNB Scam and Modi Family’s Role

The PNB fraud — one of India’s largest financial scams — first came to light in early 2018. At its heart was Nirav Modi, who, along with his uncle Mehul Choksi, allegedly orchestrated a complex web of fraudulent Letters of Undertaking (LoUs) from PNB branches to secure foreign credit without proper collateral.

While Nirav Modi fled to the UK and was arrested in 2019, Nehal Modi emerged as a key figure accused of aiding his brother in laundering the siphoned-off funds. He was already facing legal scrutiny in the US for separate fraud charges involving a diamond trade deal, but the latest arrest is directly tied to the Indian government's push for accountability in the PNB scam.

The Arrest: Coordinated Global Efforts

According to US Justice Department officials, Nehal Modi was detained in New York following an Interpol Red Notice issued based on the extradition request submitted earlier this year. The arrest followed close coordination between Indian and US agencies.

A senior CBI officer, speaking on condition of anonymity, said:

“This arrest represents the culmination of tireless investigative coordination and legal groundwork laid by Indian authorities. Nehal Modi played a significant role in layering and diverting the funds defrauded from PNB. His detention in the US is a win for transnational accountability.”

Sources within the ED confirmed that Nehal was not only a facilitator in the laundering process but also allegedly controlled shell entities across multiple jurisdictions, including the UAE, Hong Kong, and the British Virgin Islands, through which illicit proceeds were routed.

Legal Process and Extradition Path Ahead

Legal experts suggest that while the arrest is a significant milestone, the extradition process itself could be protracted. The US has an extradition treaty with India, but each case undergoes intense legal scrutiny to ensure compliance with American legal standards.

Rajiv Mehra, a senior lawyer specializing in extradition cases, noted:

“Nehal Modi has the right to challenge his extradition in US courts, and that process can take months or even years. However, given the strong evidence compiled by the ED and CBI and the broader context of international cooperation on financial crimes, his return to India is increasingly likely.”

The ED has already filed multiple chargesheets in Indian courts against Nehal Modi under the Prevention of Money Laundering Act (PMLA) and other relevant laws.

Market Context: Renewed Focus on Financial Governance

The development has triggered renewed discussion in financial circles about the integrity of banking practices and regulatory oversight. Shares of Punjab National Bank were trading flat on the day, reflecting a wait-and-watch approach by investors. However, the broader financial services index showed mild gains on improved investor sentiment about government efforts to crack down on financial irregularities.

Market analyst Harsh Vora from Quantum Securities said:

“While the news doesn’t impact PNB’s current balance sheet, it reinforces investor confidence that regulatory lapses are being addressed. It also raises hope that some recovery of the defrauded funds may be possible over time.”

Investor Outlook: Symbolic Win, Real Impact Pending

While Nehal Modi’s arrest does not immediately restore the losses suffered by Indian banks, analysts argue it strengthens India’s image as a nation serious about international legal cooperation and accountability.

Ritika Mahajan, Senior Economist at Global Insight, commented:

“The optics of bringing financial offenders to justice matter to global investors. They want to see not just reforms on paper, but real-world enforcement. Nehal Modi’s arrest sends a strong message.”

For institutional investors and stakeholders in public sector banks, the move is seen as a long-awaited consequence of pressure built over the years by Indian authorities.

The arrest of Nehal Modi is a crucial turn in the long-drawn saga of the PNB scam, which shook India’s banking industry and prompted regulatory overhauls. As extradition proceedings unfold in the US, Indian enforcement agencies are preparing for the next legal battles — both at home and abroad.

While Nehal’s arrest is not the end of the road, it is undeniably a step toward closure in one of India's most infamous white-collar crime cases.