The CBI is said to be preparing a detailed report to share with the RBI and the government on the mechanisms to be adopted to prevent the PNB-like scam - which it is in the process of completing.
Indianmandarins has learnt that the CBI's report may recommend a complete revamp and improved oversight of public sector banks.
The report may include details on how bank officials, particularly of public sector banks, ignore RBI guidelines while sanctioning credit facilities, deliberately favour certain individuals/companies by looking at their brand value and how loans are sanctioned arbitrarily without verifying documents submitted by the borrowers, irregularities in the audit of branches and poor oversight of branches having high-value transactions.
A source said, "In the case of Nirav Modi and Mehul Choksi, PNB's Brady House branch issued 293 Letters of Undertaking (LoUs) and 224 Foreign Letters of Credit (FLCs) to overseas branches of Indian banks. There was no genuine effort from PNB to verify if the money was being given to Nirav Modi's suppliers or not. Also, the overseas branches didn't bother to check the documents or raise an alarm on why PNB officers referred LoUs beyond the timeline of 90 days, in some instances for about 360 days."
According to sources, the CBI's report will also disclose how banks sit on frauds for a very long time before approaching investigation agencies, anomalies in hiring of panel valuers and misuse of technical systems like not recording SWIFT transactions (global messaging service to raise buyers' credit and funding the Nostro accounts) in the Core Banking System (CBS).
CBI preparing report to prevent PNB-like scam
By IndianMandarins - 2018-04-26 11:27:01
The CBI is said to be preparing a detailed report to share with the RBI and the government on the mechanisms to be adopted to prevent the PNB-like scam - which it is in the process of completing.
Indianmandarins has learnt that the CBI's report may recommend a complete revamp and improved oversight of public sector banks.
The report may include details on how bank officials, particularly of public sector banks, ignore RBI guidelines while sanctioning credit facilities, deliberately favour certain individuals/companies by looking at their brand value and how loans are sanctioned arbitrarily without verifying documents submitted by the borrowers, irregularities in the audit of branches and poor oversight of branches having high-value transactions.
A source said, "In the case of Nirav Modi and Mehul Choksi, PNB's Brady House branch issued 293 Letters of Undertaking (LoUs) and 224 Foreign Letters of Credit (FLCs) to overseas branches of Indian banks. There was no genuine effort from PNB to verify if the money was being given to Nirav Modi's suppliers or not. Also, the overseas branches didn't bother to check the documents or raise an alarm on why PNB officers referred LoUs beyond the timeline of 90 days, in some instances for about 360 days."
According to sources, the CBI's report will also disclose how banks sit on frauds for a very long time before approaching investigation agencies, anomalies in hiring of panel valuers and misuse of technical systems like not recording SWIFT transactions (global messaging service to raise buyers' credit and funding the Nostro accounts) in the Core Banking System (CBS).
