Cautioning all state-owned lenders in the country, the Government on Tuesday directed all chiefs of public sector banks (PSBs) to probe all non-performing assets or NPA accounts of over Rs 50 crore for possible fraud, and accordingly report the cases to Central Bureau of Investigation (CBI).

The move of the Government comes amid ongoing investigation by CBI for the mega bank fraud by PNB which reportedly committed Rs 12,700 crore fraud through alleged fraudulent misuse of letters of undertaking (loUs) by billionaire jeweller Nirav Modi and his associates recently.

“PSB MDs directed to detect bank frauds & consequential willful default in time & refer cases to CBI. To examine all NPA accounts > Rs 50Cr for possible fraud,” the Financial Services Secretary Rajiv Kumar said in a tweet.

Besides PNB, other PSBs too have approached investigating agencies, as borrowers as in the case of Rotomac Group and Simbhaoli Sugars have not returned loans.

PSBs have also been asked to involve Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) for violations of PMlA, FEMA or Export Import norms.

State-owned banks, with combined gross non-performing assets (NPAs) of about Rs 8.5 lakh crore, have been asked by the Ministry to go in for prompt fraud identification and take action within prescribed deadlines.

Kumar further said the Chief Vigilance Officer (CVC) of the bank concerned will have to vet complaint and coordinate with CBI for frauds exceeding Rs 50 crore.

Also, banks will have to seek borrower status report from Central Economic Intelligence Bureau (CEIB) on the account turning NPA and CEIB will have to revert in a week. Banks have to involve ED/DRI ‘if conditions warrant,’ under the framework for timely detection, reporting, and investigation of large value bank frauds.