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After effect of PNB fraud: Loans above this limit should be treated as fraud

Shaken by the Rs 11,400-crore PNB scam, the Finance Ministry on Tuesday set a 15-day deadline for public sector banks to come clean on bad loans above Rs 50 crore.

The ministry said that all NPAs above Rs 50 crore should be treated as possible frauds and the matter should be referred to CBI where ever necessary. The Ministry also directed bank boards to assign and fix clear accountability of senior officers.

The MDs of all the public sector banks have been directed to detect frauds or wilful defaults in time, and refer such cases to the CBI, Rajeev Kumar, Secretary in the Department of Financial Services said.

Also Read: PNB falls down the share ladder; Nirav Modi’s fraud amount to rise?

The directions to public sector banks are: 

1.Prompt fraud identification and action within prescribed deadlines
2. CVO to vet complaint and coordinate for frauds exceeding Rs 50 crore
3. NPA cases above Rs 50 crore to be examined
4. Reported fraud to be examined for Wilful default
5. Banks to seek borrower status report from Economic Intelligence Bureau on account turning NPA. CEIB to revert in a week.
6. Banks to involve ED or DRI if conditions warrant

The government has asked the Executive Directors and Chief Technology Officers (CTO) of public sector banks to prepare a blueprint for increasing preparedness in fighting financial risks.

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