Following Rs 13,000 crore fraud at the Punjab National Bank (PNB), Finance Ministry on Tuesday set a 15-day deadline for public sector banks (PSBs), and asked them to maintain pre-emptive approach in dealing with operational and technical risks. The Ministry also asked board of banks to assign clear accountability to senior functionaries in the bank. The PSBs have at their disposal 15-days to take pre-emptive action against operational and technical risks, Rajeev Kumar, Secretary in the Department of Financial Services said. The MDs at all the PSBs have been directed to detect frauds or wilful defaults in time, and also refer such cases to the Central Bureau of Investigation (CBI), he added.
All the NPA accounts over Rs 50 crore shall be examined, and ED or DRI will be involved if in case PMLA or FEMA or EXIM violations are reported. The Secretary also said that public sector banks should learn from the best practices across the banking sector, identify existent weakness in the system, and suggest strategies including technical solutions.
Commitment to clean and responsive banking:
- Prompt fraud identification and action within prescribed deadlines
- CVO to vet complaint and coordinate for frauds exceeding Rs 50 crore
- NPA cases above Rs 50 crore to be examined
- Reported fraud to be examined for Wilful default
- Banks to seek borrower status report from Economic Intelligence Bureau on account turning NPA. CEIB to revert in a week.
- Bank to involve ED or DRI if conditions warrant
The Executive Directors and Chief Technology Officers (CTOs) of public sector banks have been asked to prepare blueprint to increase preparedness in fighting financial risks, he informed. The latest deadline is part of government’s ambitious reform agenda under the Enhanced Access and Service Excellence (EASE) programme.
Last year, government announced a Rs 2.11 lakh crore recapitalisation programme for the public sector banks in order to clean their account books which are reeling under the pressure of mounting non performing assets (NPAs). The government has already launched a multi-agency probe in the Punjab National Bank (PNB) scam that has now touched Rs 12,700 crore. The earlier estimate of the fraud that was reported at the Brady House Mumbai branch of the bank stood to the tune of Rs 11,400 crore. Billionaire diamond merchant Nirav Modi is the prime accused in the scam.