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Fraud overlooked at several places in PNB scam: Bank association

Last Updated 22 February 2018, 11:20 IST

A  whopping Rs 11,400-crore PNB scam has been overlooked at multiple auditing and regulatory levels said the Maharashtra State Bank Employees Federation (MSBEF).

The MSBEF, which is affiliated to the All India Bank Employees Association (AIBEA), also demanded a Parliamentary probe into the issue.

"The entire fraud is a huge shock exposing the increasing trend of corporate loot of banks," said MSBEF General Secretary Devidas Tuljapurkar.

According to him, attempts are being made to dilute the magnitude of the fraud, "Such frauds cannot be committed in a simple way that a branch official would give LoU of Rs 11,400 crore in a period of six to seven years with no one knowing about it," he said.

The fraud has raised technology issues, supervision, monitoring, audit, internal control - besides the role of the Reserve Bank of India in the entire issue. "How is it that the RBI which carries out a regular audit of the banks could not even smell the fraud despite the number of years and the volume of money involved," Tuljapurkar said.

"The famous Harshad Mehta scam was because of the so-called innovative measure of banking receipts that landed the banking sector in deep crisis. The Nirav Modi fraud has seen the utilisations of new instrument of LoUs. Is the RBI going to do something about this?" he questioned.

Tuljapurkar said that in all probability the RBI would disown LoUs as it had the banker's receipts. "The RBI should have questioned the banks about the guarantees, examined the risks, and created necessary firewalls to make tax payers' money secure," he said.

He said that the RBI has miserably failed to fulfil its responsibility as a regulator of a vulnerable banking sector. "Why the same branch official was retained in the same department and  place for so many years  against to the rules," he said.

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(Published 22 February 2018, 11:18 IST)

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