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  1. Nirav Modi fraud: Here’s what Fitch, IMF, World Bank say about India’s biggest banking scam

Nirav Modi fraud: Here’s what Fitch, IMF, World Bank say about India’s biggest banking scam

The Rs 13,000 crore fraud at Punjab National Bank (PNB) allegedly by diamond czar Nirav Modi continues to get attention even after three months since the scam was uncovered on February 14.

By: | Published: May 4, 2018 4:52 PM
Fitch Ratings, International Monetary Fund (IMF) and World Bank have spoken about India's biggest banking scam, the nirav modi fraud Nirav Modi fraud: Here’s what Fitch, IMF, World Bank say about India’s biggest banking scam

The Rs 13,000 crore fraud at Punjab National Bank (PNB) allegedly by diamond czar Nirav Modi continues to get attention even after three months since the scam was uncovered on February 14. Fitch Ratings, International Monetary Fund (IMF) and World Bank have spoken about India’s biggest banking scam; however, they shared slightly different views. The scam at PNB became a sensational case as accused Nirav Modi and his uncle Mehul Choksi fled the country before it was uncovered, it went unnoticed for years, and the amount of fraud was too big. Currently, a multi-agency probe into the fraud is underway.

Here’s what Fitch, IMF, World Bank have said about the fraud:

Fitch Ratings: Fitch Ratings, in its latest report, said that the Rs 2.11 lakh crore bank recapitalisation plan may not be enough after the fraud. “These banks are likely to need additional government capital, however, in particular after a recent high-profile fraud case involving USD2.2 billion in Punjab National Bank,” it said. Fitch had earlier PNB on ‘Rating Watch Negative’ with Viability Rating of BB’, following the fraud. The Rating Watch Negative reflects the possibility of a downgrade of PNB’s Viability Rating.

IMF: The International Monetary Fund has called for more changes on the governance front to prevent recurrence of such frauds. The IMF said that government’s banking reforms like IBC Code, bank recapitalisation will not have a lasting impact unless they are accompanied by governance reforms, particularly for state-run banks.

World Bank: World Bank did share the same view that the fraud will have some impact on banking reforms but ruled out that it is indicative of a systemic problem in India’s financial sector. “A scam is always important for us to take a look at whether the regulatory supervision functions or the banking sector is as efficient as it should be. I wouldn’t look at one scam as indicative of a system (failure),” World Bank India head Junaid Ahmed had said during the launch of India Development report.

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