SURAT: Some diamond merchants in India’s biggest centre for trading the precious gemstones say they had stopped dealing with Nirav Modi and his uncle Mehul Choksi because they were often slow to pay dues.

The Indian financial sector was stunned when Punjab National Bank said in mid-February it was the victim of a $1.77 billion fraud - a figure that has since risen to nearly $2bn.

The second-largest state bank blamed Modi and Choksi, accusing them of conspiring with bank employees to obtain fraudulent credit overseas. Both deny any involvement.

Modi, who runs eponymously branded high-end jewellery stores that stretch from New York to Hong Kong, and Choksi, who heads Gitanjali Gems and operates stores under banners including Gili, Nakshatra and Asmi, both belong to the Jain community from the western state of Gujarat.

The Jain and Patel communities dominate the diamond cutting and polishing business centred on the Gujarati city of Surat.

Traders there who spoke to Reuters said the two jewellers had acquired a reputation for not following the industry’s unwritten code of business ethics.

“Nirav Modi and Gitanjali’s business model wasn’t convincing to us,” says Seventilal Shah, chairman of Venus Jewel, who said he had stopped dealing with either business some years ago.

“If they take goods on two months credit, and there is one month’s delay it is fine. But if it is regular episodes of delays, then there is something wrong. That was the case with these guys.”

Representatives for both Modi and Choksi did not respond to multiple requests for comment.

Published in Dawn, March 3rd, 2018