NEW DELHI: The Prime Minister’s Office (PMO) has sought a report from the Finance Ministry on recent bank frauds, in the wake of yet another loan fraud involving the IDBI cropping up. In the IDBI fraud case, involvement of executive heads and top managements of many Public Sector Banks and financial institutions has surfaced, causing major embarrassment to the government. “The PMO is keeping a close watch on the developments in the sector since the Punjab National Bank (PNB) case.
They have sought a detailed report from the ministry on the recent developments (IDBI case) and action plan decided on by all the concerned authorities and the regulator,” a senior official of the Finance Ministry told TNIE. According to the official, the report has to be sent by May 15. “It was after the IDBI loan case. The PMO also wants to know the line of action taken by the concerned authorities involving the accused,” he said.
The IDBI loan case was the latest in a series of frauds uncovered in the Indian banking sector since PNB first reported `14,000 crore fraud by two diamantaires, Nirav Modi and Mehul Choksi, in February this year. Adding to the injury was the alleged impropriety reported by private lender ICICI Bank involving its chief Chanda Kochhar. What was unfortunate was that these frauds surfaced even as the financial sector was struggling from its worst NPA crisis in the recent years. Even though the amount involved in the IDBI bank loan fraud was much smaller than the PNB case, the impact was much wider, with the involvement of two heads of banks and chairman of the Bombay Stock Exchange.
Over a dozen senior employees of the IDBI Bank, a mid-sized state-run lender, have been named by the CBI of perpetrating `600 crore fraud in collusion with C Sivasankaran, former promoter of telecom firm Aircel. The list of names involved Melwyn Rego, who heads Syndicate Bank, Kishor Kharat, who heads Indian Bank, Sethurathnam Ravi, current chairman of Bombay Stock Exchange and P S Shenoy, former CMD of Bank of Baroda. “The involvement of the top management has certainly damaged the trust factor in the financial sector. The government is strictly working on cleaning the system. Also, with less than a year for general elections, it is natural for the PMO to track it,” the official said.
What and why of the action
■ PMO has sought status report from the Finance Ministry on all the recent Public Sector Bank frauds
■ The report to involve plan of action by authorities involving PSB heads to tackle the issue
■ The action was triggered by the surfacing of recent IDBI loan fraud case
■ The Finance Ministry has to send the detailed report by May 15