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Praveen Chakravarty: India's $1.8 billion jewelry scandal exposes a flawed banking system

Ties between business, bureaucrats and politicians remain too cozy

Nirav Modi at his office in Lower Parel, on August 9, 2016 in Mumbai, India   © Getty Images

India's latest financial scandal erupted when the state-controlled Punjab National Bank disclosed that it had been hit by "fraudulent and unauthorized transactions" and named celebrity jeweler Nirav Modi as the prime suspect.

This is a severe blow to a banking system that is reeling from a bad loan crisis. It is also serious international embarrassment for Indian business. Modi is not the first Indian billionaire to face criminal investigation over large amounts of money borrowed from a state-owned bank.

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