Stocks of Indian jewelers and state-run banks have been sinking since Friday, when the full extent of what’s now understood to be the largest bank fraud case in Indian history was unveiled in a complaint to Indian federal banking regulators filed by the the Punjab National Bank, a state-owned bank based in New Delhi.

The bank discovered the first bread-crumbs in January, but the full extent of the fraud – which was carried out over seven years and involved the theft of nearly $1.8 billion – wasn’t known until very recently. And before today, when Reuters published a report fleshing out some newly uncovered details, little was known about the mechanics behind it.

The pressure has dragged the S&P BSE SENSEX – an index of some of India’s most established companies – lower.

Last week, we learned that the fraud involved Nirav Modi, one of India’s 100 richest men and a well-known jeweler who has dressed both Hollywood and Bollywood stars, was at the center of the conspiracy. He was aided by Mehul Choksi, whose Gitanjali Group of companies was intimately involved in the fraud. Finally, the third key conspirator was PNB branch deputy manager Gokulnath Shetty, who oversaw the circulation of fake “letters of undertaking” – essentially one bank vouching that a certain client is credit-worthy and should qualify for a loan from another bank.

From the broadest possible perspective, the fraud unfolded as follows: Modi and Choksi controlled a group of fraudulent jewelry companies. Shetty would circulate “letters of undertaking” vouching for collateral that didn’t really exist. Based on these letters, the shell companies secured loans from foreign branches of India-based banks. This money then disappeared.

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