This refers to the editorial, “A fraud for the ages” (February 16). It would be an understatement to say that the Rs 11,300 crore fraud at the Punjab National Bank (PNB) has shocked the country. Banks and financial institutions generally have four-eye principal, a maker and checker mechanism, to ensure that all transactions or disbursement goes through a thorough process so that all loopholes are plugged. It is surprising that despite regular audits of these banks, either by internal auditors or external auditors, sometimes even by the Reserve Bank of India (RBI), this contingent liability, which was there on the PNB’s balance sheet, remained unnoticed for so long.
At the moment, it appears that only two employees of the bank are responsible for this mess but more staff might be involved. Coming to recovery of the dues from Nirav Modi and associates, I am sure, they have enough assets to recover a significant portion of the dues. But action against him must be swift and time-bound, more so in the backdrop of the recent strict norms of RBI in terms of rising non-preforming assets. Needless to say, a criminal investigation should be initiated against Nirav Modi. This incident is also a lesson for other banks, both public and private. It’s not that private sector banks are not prone to such frauds.