Public Sector Banks likely to submit report on potential wilful defaults above Rs 50 crore by May-end
After a delay of over two months, public sector banks are expected to submit to Centre details of all non-performing account holders who owe more than Rs 50 crore to the banks.
A senior government official told Moneycontrol that the list should be with the government by the end of May.
“We are expecting the first report to be with us by second or third week of this month,” the official said, requesting anonymity.
Department of Financial Services had asked, in February, all public sector banks to “detect bank frauds and consequential willful default” for loan accounts above Rs 50 crore.
In a tweet, Rajeev Kumar, secretary, DFS had said that banks could refer the cases to central bureau of investigation (CBI) for probe along with involving enforcement directorate (ED) and directorate of revenue intelligence (DRI) if required.
PSB MDs directed to detect bank frauds & consequential wilful default in time & refer cases to CBI. To examine all NPA accounts > Rs. 50Cr for possible fraud. Involve ED/DRI for PMLA/FEMA/EXIM violations if any. #EASE #NewIndia @FinMinIndia @PMOIndia @PIB_India pic.twitter.com/ZURiWu4D5T
— Rajeev kumar (@rajeevkumr) February 27, 2018
The government had swung into action after the banking sector was hit by over Rs 13,000 crore fraud at Punjab National Bank, country’s second largest PSB.
Also read: PNB fraud case: Govt asks boards of PNB & Allahabad Bank to take action against officials named in CBI chargesheet
PNB had reported, in February, fraudulent transactions worth over Rs 13,000 crore by diamantaire Nirav Modi and Uncle Mehul Choksi at Brady House branch in Mumbai. The fraud highlighted lapses in the bank’s lending process where several fraudulent letters of undertaking (LoUs) had been issued to the duo since 2011 by compromising SWIFT (society for worldwide interbank financial telecommunications) network. SWIFT was not linked to bank’s core banking solution (CBS) system, leading to transactions go unrecorded.
This was followed by string of scams involving Rotomac Global Pvt Ltd and Simbhaoli Sugars Ltd. In the former case, a consortium of seven state-owned banks lodged a complaint against the company for alleged loan default of Rs 3,695 crore, the latter involved case against Simbhaoli’s chairman Gurmit Singh Mann, deputy managing director Gurpal Singh and others in connection with an alleged bank loan fraud of Rs 97.85 crore.
Finance ministry, in February, gave a 15 day deadline to PSBs to develop “blueprint to enhance preparedness for rising operational and technological challenges”.
15 day deadline for PSBs to take pre-emptive action & identify gaps/Weaknesses to gear up for rising Ops & Tech risks; To learn from best practices & pinpoint strategies including tech solutions; Clear accountability of senior functionaries.#EASE @PMOIndia @FinMinIndia @PIB_India pic.twitter.com/tankAMtBem— Rajeev kumar (@rajeevkumr) February 27, 2018
The ministry directed boards of PSBs to assign clear accountability to senior functionaries for implementation, do comparative assessment of their bank’s practices with best practices, identify weakness in existing system and provide corrective action plans.
Banks were also directed to examine cases in light of Prevention of Money Laundering Act (PMLA), Foreign Exchange management Act (FEMA) and export-import (EXIM) regulations.
“Banks also have to seek borrower status report from Central Economic Intelligence Bureau on accounts turning NPA,” the directive said.