In the wake of the Rs 12,600 crore fraud in state-run Punjab National Bank (PNB) by accused diamantaire Nirav Modi and his uncle Mehul Choksi, the government has set a deadline of 15 days for public sector banks (PSBs) to examine all non-performing assets above Rs 50 crore for possible fraud and to identify operational and technical gaps. This comes a day after the bank revised its loss due to fraud stating that the figure could go up by another Rs 1,300 crore. Also as a classic case of shutting the door after the horse has bolted, but the multi-crore fraud hit bank appointed AK Pradhan as the Group Chief Risk Office.
Announcing this through the Finance Ministry’s Twitter handle, Financial Services Secretary Rajeev Kumar also said that executive directors and chief technological officers of the PSBs have to prepare a blueprint for combating increasing risks.
“15 day deadline for PSBs to take pre-emptive action and identify gaps/Weaknesses to gear up for rising Ops and Tech risks; To learn from best practices and pinpoint strategies including tech solutions; Clear accountability of senior functionaries,” Kumar tweeted.
The Ministry has also directed government owned banks’ managing directors to examine all non-performing assets (NPAs), or bad loans, above Rs 50 crore “for possible fraud” and if there are any violation of laws on money laundering and the Foreign Exchange Management Act, Kumar said.
“PSB MDs directed to detect bank frauds and consequential wilful default in time and refer cases to CBI. To examine all NPA accounts > Rs 50Cr for possible fraud. Involve ED/DRI for PMLA/FEMA/EXIM violations if any,” he said in a separate tweet.
Late on Monday night, PNB informed stock exchanges that the amount of fraudulent transactions involving the Nirav Modi scam could go up by over Rs 1,300 crore.
“In continuation to our filing with stock exchanges on February 14, 2018, we have to inform that quantum of reported unauthorised transactions can increase by $204.25 million,” PNB said in a Bombay Stock Exchange (BSE) filing.
In this connection, Indian industry has called for better and hi-tech control systems to check financial frauds as also a gradual decrease in government holding in PSBs.
“The three key solutions for the banking sector are better management and operational efficiencies, use of technology such as blockchain and big data analytics, and lowering government shareholding in public sector banks,” CII President Shobana Kamineni said in a statement here on Sunday.
Last week, Finance Minister Arun Jaitley criticised regulators, as well as bank managements and auditors, for their failure to detect bank frauds saying “politicians are accountable but regulators are not”.
Accumulated gross NPAs of state-run banks have crossed the staggering level of Rs 8.5 lakh crore,
The CBI said it has questioned former Punjab National Bank Managing Director Usha Anant Subramanian and ICICI Bank Executive Director N.S. Kanan in connection with its Rs 12,636 crore bank fraud case.
A CBI official said Subramanian was quizzed at the agency’s Mumbai office.
“The agency also questioned the ICICI Executive Director because it was the leader of a consortium of banks that sent money to Mehul Choksi’s Gitanjali Group,” the official said.
He said the Central Bureau of Investigation received a complaint from the PNB alleging a loss of Rs 1,251 crore — all linked to Gitanjali Group.
Besides, two PNB General Managers Nehal Ahad and Vimlesh Kumar were also questioned, apart from two statutory auditors of the PNB, in the case.
On Monday, the CBI questioned three statutory auditors and two General Managers of PNB.
The CBI had filed the first FIR in the scam on February 14 against Nirav Modi, his wife Ami, brother Nishal, uncle Mehul Choksi and his firms Diamond R US, Solar Exports and Stellar Diamond.
Nirav Modi, his family and Choksi left the country in early January. The FIR mentions fraud of around Rs 6,400 crore.
The CBI filed the second FIR on February 15 for Rs 4,886.72 crore fraud against the Gitanjali Group headed by Choksi.
The official said CBI had written to the Chief Vigilance Officers of five banks to share details of money credited to Nostro accounts of PNB on receiving Letters of Understanding and Foreign Letters of Credit, which were then withdrawn by Nirav and Choksi’s group as buyers’ credit.
The agency has till date arrested 12 persons in the case.
The fraud-hit Punjab National Bank (PNB) has reported an additional Rs 1,300 crore unauthorised transactions, taking the estimated quantum to Rs 12,600 crore in the scam related to diamond trader Nirav Modi and owner of Gitanjali Gems, Mehul Choksi.
In a 11.22 p.m., late night filing with the stock exchanges on Monday, the bank said: “In continuation to our filing with stock exchanges on February 14, 2018, we have to inform that quantum of reported unauthorised transactions can increase by $204.25 million.”
The Central Bureau of Investigation on Monday said it questioned PNB Executive Director K.V. Brahmaji Rao, two General Managers and a retired official in connection with its probe into the multi-crore fraud.
The Income Tax Department also said it had attached 66 more bank accounts related to accused Choksi.
Earlier, PNB, the second largest public sector bank in India, had said it had detected a $1.8 billion fraud in the Brady House Branch in Mumbai.
“The bank has detected some fraudulent and unauthorised transactions (messages) in one of its branches in Mumbai for the benefit of a few select account holders with their apparent connivance,” the filing by PNB earlier said.
Initially it had put the quantum of such transactions at around Rs 11,300 crore.
The bank’s shares dropped drastically on Tuesday after this regulatory filing and it was trading at Rs 102.45 per share, down 8.45 per cent at 10.46 a.m.
It may be seen as a classic case of shutting the door after the horse has bolted, but the multi-crore fraud hit Punjab National Bank appointed A.K.Pradhan as Group Chief Risk Officer, a regulatory filing by the bank said here on Tuesday.
According to PNB, Modi, Choksi and their associates worked with rogue PNB employees and used fake guarantees to obtain loans from abroad which were then illegally rolled over.
Following the late night regulatory filing by Punjab National Bank (PNB) that upped the fraudulent amount involved in the Nirav Modi-engineered scam to Rs 12,600 crore, the bank’s shares nosedived in the bourses on Tuesday.
PNB’s shares were trading at Rs 98.15 per share, down 12.29 per cent, at 3 p.m. in the BSE. The scrip had fallen even lower during the intra-day trade to Rs 96.10 per share.
In an 11.22 p.m. late night filing with the stock exchanges on Monday, the bank said: “In continuation to our filing with stock exchanges on February 14, 2018, we have to inform that quantum of reported unauthorised transactions can increase by $204.25 million.” (IANS)