NEW DELHI: Public Sector Banks (PSBs) on Thursday claimed there was no other fraudulent Letter of Undertaking (LoU) apart from those already reported to the Central Bureau of Investigation, adding that they would bring in more robust and secure risk management mechanisms within six months to check frauds.
“Each bank has already scanned their LoU/LoC related transactions so far. All of them are properly assessed, genuine and accounted for except those already reported to the investigative agencies. There is no other unauthorised authority letter,” M S Sastry, Chief Risk Officer and Deputy Managing Director of State Bank of India said after a workshop on the issues of operational and technological risk management.
All the chief technical officers and chief risk officers of the PSBs attended the workshop.
The meeting came after the finance ministry’s directives on February 27 directing all the state-owned banks to come out with a pre-emptive action plan and identify gaps/weakness, within a 15-day period, to gear up for rising operation and technological risks in the wake of the Punjab National Bank loan fraud worth Rs 13,700 crore.
The government had asked all the PSBs to audit all their LoUs and to report any fraud or suspected fraud cases till March 15.
The PSBs said they would be putting up their action plan to tighten security in the areas of trade finance, SWIFT, credit risk, operational risk besides cyber and IT risk to their respective boards. Within three to six months, an action plan would be implemented by all the banks.
“Further controls have also now have been put in place that included additional layer of approvals for all outward swift message, integration of SWIFT with CBS (core banking solution) latest by April 30, 2018 besides time restrictions for such transactions that is between 9 am to 8 pm only,” Sastry added.
After the PNB scam, the Reserve Bank has stopped banks from issuing LoUs and Letters of Comfort for trade finance for imports into the country.