PNB fraud: Bank officers union wants bank, RBI roles probed

A bank officers union on Tuesday called for a thorough investigation into the possible lapses at Punjab National Bank's board and also at the regulator RBI to find out how the Rs 11,400-crore scam continued for multiple years.

"How the checks and balances are appropriately operated by the bank at the highest level of operation, and how RBI arms were a mute spectator, are the subject matter of investigation," the All India Bank Officers Association said in a statement.

It said the exposure to the gem & jewellery sector and also foreign exchange dealings are reported to the board, which has representatives of both the RBI as well as government.

Wondering how the scam went undetected, it said a branch dealing with foreign exchange is subjected to a "foreign exchange audit" by the bank as well as by the Reserve Bank regularly.

Apart from that, there are a host of audits including internal audit, concurrent audit, snap audit, recovery audit, statutory audit, external audit and stock audit which are conducted regularly.

The union said it is unfair to blame the public sector banks if PNB has not linked its core banking system with the international payment gateway system of Swift.

It also criticised those calling for privatisation of state-run banks in the face of the scams like the one at the PNB emerging up.

Also read | PNB fraud case: Those cheating the banking system will be chased down, says Finance Minister Arun Jaitley

PNB, the second largest state-run bank, had on February 14 informed the exchanges of detecting USD 1.8 billion worth fraudulent transactions at its Brady House branch in Horniman Circle area of south Mumbai and named the firms led by Modi and his uncle Mehul Choksi's Gitanjali Group and some other diamond and jewelry merchants as suspects.

The bank has also filed criminal complaints with CBI and the ED, both of which launched nationwide searches on dozens of offices and residences of the alleged fraudsters.

The bank has named Modi's brother, his American wife Ami, and uncle Choksi besides some others in the FIR.