All bad loan cases above Rs. 50 crore at public sector banks will be examined for fraud. This was said in a tweet by Financial Services Secretary Rajeev Kumar. “PSB (public sector bank) MDs directed to detect bank frauds & consequential wilful default in time and refer cases to CBI.
To examine all NPA accounts & Rs. 50 crore for possible fraud,” he said in a tweet. The direction to state-run banks come after unearthing of a massive fraud at Punjab National Bank, India’s second biggest state-run lender.
PNB on Monday said that the recent fraud revealed by the bank could be Rs. 1,300 crore more than the current estimate. The state-run bank had first disclosed the fraud on February 14th, estimating “fraudulent and unauthorised transactions” at $1.77 billion (about Rs.11,400 crore).
After the latest disclosure, the quantum of unauthorised transactions related to the fraud is estimated to go up to Rs. 12,700 crore. The scale of the fraud, the biggest to hit an Indian lender, has stunned the country and put the spotlight on supervisory oversight.
Under the new framework, for timely detection investigation of large value bank frauds, all cases pertaining to NPA or non-performing assets above Rs. 50 crore at public sector banks to be examined for fraud. Reported frauds will be examined for wilful default. The bank’s Chief Vigilance Officer will vet the compliant and coordinate with CBI for frauds exceeding Rs. 50 crore.
Banks will seek borrower status report from the Central Economic Intelligence Bureau on account turning into bad loans. And Economic Intelligence Bureau will revert in a week. Banks can involve other government agencies like Directorate of Revenue Intelligence (DRI) and the Enforcement Directorate (ED) if conditions warrant.
Billionaire jeweller Nirav Modi and his associates are being investigated by multiple probe agencies, following a complaint by the Punjab National Bank (PNB), that they allegedly cheated the bank to the tune of Rs. 11,400 crore, with the purported involvement of a few employees of the bank.