Jaitley slams regulators for failure to detect PNB fraud

Marco Green
February 24, 2018

He also slammed bank management for failing to do their job saying inadequate supervision and top management being unaware of what was going on in the bank was worrisome. He also said tighter laws need to be implemented to ensure criminal acts in business lead to punishment, wherever the culprit is. Jaitley argued that cases like PNB fraud, in which jeweler Nirav Modi, along with his uncle Mehul Choksi, fooled the bank of Rs 11,300 crore, impacts the ease of doing business in the country.

Investigative agencies have raided their properties and arrested bank employees and persons linked to his firms.

Jaitley said that regulators have a very important function, regulators ultimately decide the rules of the game and they have to have a third eye which perpetually is open.

Jaitley said the question of "moral hazard" comes up in using taxpayers money to recapitalise banks that are hugely stressed on account of their accumulated non-performing assets (NPAs), or bad loans.

Frauds call for tightening regulations where they are lacking, he said. If you periodically have incidents like these, the entire effort around ease of doing business goes into the background and these scars on the economy take the front seat. "Those who deviate from that cause must always remember that the consequences will not only be commercial and civil".

On Friday, FICCI president Rashesh Shah said that he met the finance minister and asked him to begin the process of bank privatisation in a phased manner, leaving just 2-3 lenders in the public sector.

Voicing concerns about willful defaults at the 4th Global Business Summit, Finance Minister Arun Jaitley warned increasing cases of willful default would affect ease of doing business. "It is incumbent on us as a state, till the last legitimate capacity of the state, to chase these people (fraudsters) to the last possible conclusion to make sure the country is not cheated", Mr Jaitley said while addressing the annual meeting of Association of Development Financial Institutions in Asia & Pacific (ADFIAP).

Other reports by Click Lancashire

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