The prominent Nirav Modi case has turned the focus on the multi-billion exchange now, yet this business has been on the radar of insight offices for quite a while.

Alarms were conveyed as right on time as 2013. The Directorate of Revenue Intelligence (DRI) had broken an instance of a jewel dealer who had utilized a manufactured bill of section and got a letter of credit encashed in Hong Kong. Noticing a bigger issue, the DRI at that point composed an itemized note to the national bank, hailing the case.

It appeared that the usual way of doing things was very mainstream in the precious stone exchange, and the DRI soon ended up managing a greater case in Mumbai in 2014.

By then the new government drove by Narendra Modi was set up with containing dark cash as one of its key plans. The DRI again took up the issue with the RBI this time, as well as with the Special Investigation Team on dark cash, Financial Intelligence Unit, Enforcement Directorate and the business and industry service.

"There was gross abuse of providers' credit and purchasers credit standards ... This was hailed with the concerned experts including the national bank ... Various precious stone merchants were observed to abuse it," said an official aware of the correspondence the organization had conveyed. This credit, given for 270 days, was recycled with follow-up paper work.

DRI had suspected the managing an account framework to be vulnerable to the usual way of doing things utilized by some in the precious stone exchange — produced bill of passage or utilization of one bill of section in various bank offices to get the letter of credit encashed. A bill of passage gives subtle elements of the genuine shipment of imported merchandise.

The RBI did not react to ET's questions. Be that as it may, a source said the national bank took measures to fix the system following the DRI correspondence