pnb fraud

 pnb fraud is astounding . as usual system failure is evident. and as usual the whole thing may end with the crucifixion of a manager or two . and that in brief is the biggest malady banking industry is facing . nay the country is facing . the country has been facing . the country is likely to face for ever .


  rbi 

let us start at the top. what exactly has rbi been doing ? modi's should be one of the the biggest loan accounts in the branch . there is no way rbi can skip this account in its inspection. did they ever comment on the risk of default of this giant borrower ? did they suggest any precautions ? did they study the performance of diamond industry as a whole and try to interpolate modis for a comparative analysis ? or are these things too much to expect from an rbi inspection ? if they indeed are , isn't it time to scrap this exercise ?

lou have most probably been issued in the past too . ( luckily they didn't devolve on the bank). did rbi look for a credit appraisal and ensure a proper sanction ? did they see what the securities are ? did they confirm that the goods expected to be imported did arrive and was properly hypothecated to the bank in these past lou . did they rule out the chance that past lou were cleared just by book adjustments ?


   pnb  head office

let us come down to the bank head office . credit monitoring set up in ho should have done all that rbi inspection is supposed to have done. in fact they should have done it first. it is the basic responsibility of the on line monitoring group , the inspecting officers and the sanctioning authority . rbi's role comes in much later.

incidentally it will be interesting to know what exactly the terms of sanction of this lou facility to the company are . what are the securities ? what are the other conditions if any ? what is the time frame for completing the underlying transaction , viz imports ? or is it possible that this facility was never mentioned in the credit reports submitted to the sanctg authy and therefore never sanctioned by an appropriate authy ? 

most glaring omission however is that this lou facility was kept outside core banking solution platform . is it the case that non fund based facilities are not enabled in cbs ? or is it that only lou are outside cbs ? for technical issues ? or other considerations ?

most surprising thing however is that the ho probably had no means to know of transactions done out side cbs . given the fact the every bank had a system of getting regular reports of transactions done outside cbs . and if pnb was an exception that needs to be explained

   pnb  branch

let us come further down ,to the branch . isn't there a way for the branch in charge to know what facilities are being enjoyed by one of the biggest loan customers of the branch ? isn't it his duty to send credit reports to higher authorities for sanction? and to ensure that terms and conditions of sanction are adhered to ?

just as a test case will the branch in charge reveal how many times he visited the unit , inspected the stock ? or reviewed the stock inspection reports of his juniors ? and whether he ever noticed any comment regarding imported goods being stored separately ? or not found at all ?

are we to believe that br in charge never knew of the swift messages ? and that he has never heard of lou ?  lou originating from his branch

   govt 


let us go up now to the topmost layer , the govt. i deliberately kept it for the last as it is the most difficult stake holder to handle. it is that part of the sky where unprofessional lies fly around. for example note that this fraud originated in 2011. this lou which devolved on the bank in early 2018 had its origin in 2011 . this lou which was issued for a period of one year fraudulently , as against the normal validity period of 90 days, dates back to 2011 !

 then the silence on the claim by a whistle blower that he sent an alert in 2016. then the explanation that in international meetings anyone can barge into the group photos with the pm and that it doesn't imply anything . and the unexplained coincidence that every one of the big enough defaulters left the country just in time to dodge the law enforcement agencies of this country.

and the declaration that no loan which could turn npa was sanctioned after his govt assumed office . and most interestingly the stubborn silence since then. and probably his vow not to break it on mundane things like a bank fraud of a few thousand crores.


   media

finally a word on the media . they are the people who give us stories. they paint it in choicest colours.

initial breaking news was that it originated in 2011 . and we waited for the links to  nehru or at least his family .

then came the expert opinion that one year validity of the lou is what the fraud is all about . had it been the normally permitted 90 days nothing would have happened .

then the story broke that a manager sitting at his desk for unduly long period managed it solo . using his swift password. and understandably nothing else.

waiting for more breakneck news


   conclusion  

 pnb fraud is astounding . as usual system failure is evident. but the whole thing may end with the crucifixion of a manager or two . as usual .

 and that in brief is the biggest malady banking industry is facing . nay, the country is facing . the country has been facing . the country is likely to face for ever .