Special Report

Centre to RBI: The Rs 11,400 crore fraud is a “supervisory failure” at the central bank

Mumbai/New Delhi: The Centre is finally taking a call on the PNB fraud in a letter to the RBI, it has been conveyed that the Rs 11,400 crore fraud smacks of ‘‘supervisory failure” at the central bank. The RBI has been further asked to explain why the alleged scam discovered by the PNB went undetected in its systems. It has also been told to check the efficacy of its fraud-detecting procedures and systems.

A Reuters report says that in the letter, the government has raised questions about the central bank’s “efficacy of supervision to detect and check systemic failure.” “Either the framework designed by the RBI to prevent and detect such frauds is inadequate or the RBI is unable to ensure its effective implementation,” the letter says.

Your actions destroyed my brand and business: Nirav Modi to PNB
The RBI did not immediately respond to a request for comment from the wire service, since it was a holiday in Mumbai. A finance ministry spokesman also declined to comment. Meanwhile, the CBI gave the CVC a presentation on the alleged fraud. The CBI has told the commission that a system failure took place at several levels.  The CVC, in turn, has issued instructions that officials involved in the fraud, as well as those who could have taken action and prevented the fraud, be identified.

In another development, the CBI has sealed Punjab National Bank’s MCB Brady House branch in Mumbai. It is at this branch that the fraud was carried out. A source at the CBI said the branch was likely to resume operations on Tuesday.


Hit hard by the country’s biggest bank fraud, the government is looking at tightening the norms for appointment of statutory auditors at public sector banks to help detect any irregularities early and take corrective actions, according to a government official. At present, PSBs appoint their own auditors and questions have been raised about how the fraud could have remained undetected for seven long years.


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