PNB scam fallout: Finance ministry gives PSBs 15-day deadline for pre-emptive plan to combat risks
Stung by the country's largest banking fraud at PNB, the finance ministry on Tuesday asked all public sector banks (PSBs) to come out with 'pre-emptive' action plan to combat rising operational and technical risks, and assign clear accountability to senior functionaries
New Delhi: Stung by the country's largest banking fraud at PNB, the finance ministry on Tuesday asked all public sector banks (PSBs) to come out with "pre-emptive" action plan to combat rising operational and technical risks, and assign clear accountability to senior functionaries.
Executive Directors and chief technology officers (CTOs) of PSBs have been asked to prepare a blueprint to enhance preparedness for combating increasing risks, Financial Services Secretary Rajiv Kumar said in a tweet.
A multi-agency probe has been launched in the alleged scam at PNB that has now touched about Rs 12,700 crore. Late last evening, Punjab National Bank said that the amount involved in the fraudulent transactions could increase by $204.25 million from the earlier estimate of $1.77 billion.
On 14 February, PNB had detected the fraud wherein billionaire jeweller Nirav Modi and associates allegedly cheated the bank by acquiring fraudulent letters of undertaking (LoUs) from one of its branches for overseas credit from other Indian lenders.
"15 days deadline for PSBs to take pre-emptive action and identify gaps/weakness to gear up for rising Ops and Tech risks; To learn from best practices and pinpoint strategies including tech solutions; clear accountability of senior functionaries," the Secretary said.
Each PSB will have to form a group comprising their EDs and CTOs and it will be the responsibility of the panel to "learn" from best practices across the banking sector and identify weakness in existing arrangements.
They will have to come out with comparative assessment of their banks' operational risk management practices with best practices and "identify gaps and areas for improvement", the Secretary said.
The EDs and CTOs, he added, will have to prepare reports based on best practices and minimum acceptable standards and suggest action points including technological solutions.
Boards of banks have been asked to assign clear accountability to senior functionaries for implementation and compliance of the report.
The 15-day deadline to PSBs comes as part of government's ambitious reform agenda, under the rubric of an Enhanced Access and Service Excellence (EASE) programme.
Presenting the Union Budget 2018-19, Finance Minister Arun Jaitley had said that PSBs' Rs 2.11 lakh crore recapitalisation programme has been integrated with EASE.
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