PNB scam was unexpected. The government must give extended tenures to the current PSU Bank chiefs, Raamdeo Agrawal said.
The banking sector is under immense stress since multi-crore fraud was reported at Brady House branch of at Punjab National Bank (PNB). The financial treachery in the country’s second largest lender has not only raised fingers at the governance norms followed at public sector banks, but also questions the relevance of government’s Rs 2.11 trillion recapitalisation program launched by its last year to clean loan books of the banks. So, the timing of the scam unsettling since it comes at a time when government is busy finding corrective measures to solve the mounting non-performing assets (NPAs) problem. “Nobody was ready for PNB fraud,” Raamdeo Agrawal of Motilal Oswal told CNBC TV18. In view of its efforts to solve problems in the country’s banking sector, the government must give extended tenures to the current PSU Bank chiefs, he added. The Rs 13,000 crore scam was reported by the PNB on 14 February to the regulatory exchanges.
2018 is likely to be a year of correction, however, individual stocks will keep doing well moving ahead, Raamdeo Agrawal told CNBC TV18. The market still is overvalued and investors should be ready for a 10 percent downside, he added. Raamdeo Agrawal said that many segments of economy are firing away and a boom is being witnessed in the high-end commercial vehicle segment.
The PNB informed that billionaire diamond merchant Nirav Modi and a few former bank employees colluded to issue fake letters of undertaking (LoUs) which were issued to raise credit from a few overseas branches of the Indian banks. Finance Minister Arun Jaitley said in a written reply in Rajya Sabha on Tuesday that PNB’s Brady House branch issued as many as 1,213 LoUs for Nirav Modi’s companies. Former PNB employees began issuing letters of undertaking to foreign branches of a few Indian banks from 5 March, 2011, Arun Jaitley said. Both Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) are currently conducting investigation in the entire scam.