State-run lenders get 15-day deadline to prepare blueprint.
New Delhi : In the wake of Rs 12,700-crore fraud at Punjab National Bank (PNB) by accused diamantaire Nirav Modi and his uncle Mehul Choksi, the finance ministry on Tuesday asked all public sector banks (PSBs) to come out with “pre-emptive” action plan to combat rising operational and technical risks, and assign clear accountability to senior functionaries.
Executive Directors and chief technology officers (CTOs) of PSBs have been asked to prepare a blueprint to enhance preparedness for combating increasing
risks, Financial Services Secretary Rajiv Kumar said in a tweet.
The government on Tuesday set a deadline of 15 days for PSBs to examine all non-performing assets above Rs 50 crore for possible fraud and to identify operational and technical gaps.
“Fifteen days deadline for PSBs to take pre-emptive action and identify gaps/weakness to gear up for rising Ops and Tech risks; To learn from best practices and pinpoint strategies including tech solutions; clear accountability of senior functionaries,” Kumar said.
Each PSB will have to form a group comprising their EDs and CTOs and it will be the responsibility of the panel to “learn” from best practices across the banking sector and identify weakness in existing arrangements.
They will have to come out with comparative assessment of their banks’ operational risk management practices with best practices and “identify gaps and areas for improvement”, the secretary said.
The EDs and CTOs will have to prepare reports based on best practices and minimum acceptable standards and suggest action points including technological solutions. Boards of banks have been asked to assign clear accountability to senior functionaries for implementation and compliance of the report.
PNB on Tuesday said it has appointed A K Pradhan as group chief risk officer.
Meanwhile, the CBI has questioned former PNB managing director Usha Ananthasubramanian and ICICI Bank executive director N S Kanan in connection with its over Rs 12,600 crore bank fraud case.
A CBI official said Ananthasubramanian, who is currently the CEO and MD of Allahabad Bank and also the chief of Indian Banks Association, was quizzed at the agency’s Mumbai office.
“The agency also questioned the ICICI Bank executive director because it was the leader of a consortium of banks that sent money to Mehul Choksi’s Gitanjali Group,” the official said.
According to CBI officials, a loan totalling Rs 5,000 crore was given to the Gitanjali Group in 2016 by a consortium of 34 banks.
Meanwhile, ICICI Bank said in a statement that the bank has no exposure to the Nirav Modi group of companies and has not issued any Letter of Undertaking (LOU) or any buyer’s credit exposure against LOUs with respect to the Nirav Modi group of companies as well as the Gitanjali group of companies. “We are working capital lenders to the Gitanjali group of companies along with several other banks in the consortium,” the bank said.
Besides, two PNB general managers Nehal Ahad and Vimlesh Kumar were also questioned, apart from two statutory auditors of the PNB, in the case.
tightening noose
PSBs will have to form a group comprising EDs and CTOs and it will be the responsibility of the panel to learn from best practices across the sector and identify weakness.
They will have to come out with assessment of their banks’ operational risk management practices with best practices and identify gaps and areas for improvement.
PNB has appointed A K Pradhan as group chief risk officer.
