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An unaccountable fraud

The investigation in PNB’s multi-crore scam is widening significantly and has now taken the apex management of many banks in its jaws. Even Serious Fraud Investigation Office (SFIO) of Corporate Affairs Ministry has kick-started its investigation in this case in tandem with Central Bureau of Investigation and Enforcement Directorate. PNB’s Managing Director and Chief Executive Officer were grilled on Wednesday, and notices are sent to the chiefs of two of the largest private sector banks, ICICI and Axis Bank. Though SFIO is set to expand its ambit of investigation to the other banks that lent money to Nirav Modi and Mehul Chouksi, yet a concrete result seems unlikely given the current complex process and velocity of the probe. It is more unfortunate that fugitive defaulters rebuffed to even participate in the probe, and ironically our investigation agencies are unable to figure out a way to deal with this extreme tiresome situation.

After revising the fraud estimate to Rs 12,700 crore from Rs 11,400 crore, CBI’s latest statement on the intensity of the scam points out towards the uncertainty of scam amount. Perhaps, it’ll be unearthed, once CBI obtains all the Letter of Undertakings (LoUs). This is significant that many LoUs were returned to Modi-Chouksi’s companies, apparently, that must have helped defaulters keep raising money from the banks. The way borrowers in collusion with some bank officers looted the banks point towards the rising vacuum in our banking system and also put a big question mark on the functioning of banks. CBI has arrested about 20 people in this case including the ‘main protagonist of the fraud’ and ‘brain behind the conspiracy’, the vice chairman of Gitanjali group. But, the stage managers are still at large.

The government, as well as the bank management, must fix the errors for such a big fraud and stand accountable to the nation. Besides, the central banking institution of India RBI’s role in the entire episode wasn’t clean-handed. RBI’s laxity reflects in the fact that PNB hadn’t undergone an audit for 9 years, despite RBI has its own force of auditors, and is empowered with the right to audit any bank any time.

Ultimately, the entire system must pull up its socks and let its laxity take a back seat. Accountability may, significantly, bring down such frauds in the country and help probe agencies to dig out the roots of kingpins behind such scams. If Government, banks and investigation agencies had acted in a better and responsible way, peoples’ money would have been saved from the hooligans hollowing the nation.


The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of The writer(s) is(are) solely responsible for any claims arising out of the contents of this article.

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